You are amazing.
It was such a good deal that the bank moved on it right away before anyone else had a chance to submit an offer.
They are the only lender that moves quickly so don’t let anyone else know your secert plan.

There were other more important considerations in play here Billy. This lender had just shut down. Their assets were being acquired and they had just been instructed to dump all of their REO inventory because the acquiring entity didn’t want any of the bad loans on the books once the acquisition was complete.

All sarcasm aside, thanks for the comment, Billy. It helped to clarify the point that not every lender has the same motivation - and motivation is key to getting a good deal. To your second point, there are hundreds of REOs on the market that are way over priced and have languished on the market for months because the lender is not as motivated.

I am interested in how you structured it so it was impossible to say no. The only way I can get a quick response around here is to offer full price on one that has been on the market for awile. Otherwise they generally won’t respond for a couple of weeks.

Dan, I don’t know the Atlanta real estate market at all, but I suspect that the Atlanta foreclosure market is similar to here, in that the process varies from lender to lender.

Part of our success with REOs here is due to the leg work we have already done. We started by contacting every lender possible and getting a fairly thorough understanding of each of their preferred methods and policies for handling short sales, deed in lieus and REOs.

I followed that up with agents who control a lot of the REO inventory and did the same thing with these agents. Now when we write an offer, it is structured specific to the whims of the lender and agent. All of them include our own BPO.

Most of the time we get exactly what we want without a counter offer back.

Thanks for sharing Bob. I really like the idea of including a BPO with the offer.

There is no question that things will vary from bank to bank. As banks run into liquidity issues you will find they are much more open to negotiate then when they don’t have issues. Agents need to learn about what motivates a bank as they are currently the #1 seller in many markets.

Thanks for such great information. I am always on the lookout for such useful resources.

I’m a newbie at R. E. What the heck is a BPO?

BPO stands for broker price opinion. It differs from an appraisal in that it gives the lender an idea of what the broker thinks the property should be listed at for a quick sale.

We know someone will have to pay for the loss of taxes. It will be interesting to see the laws which change as we weed
through the end of this down market.

The foreclosures in my area seem to always end up at First Preston who already has a real estate agent/company they automatically send all their REOs to. Many of the agents don’t want to be “bothered” with REOs or short sales and if you don’t use the agent, you can’t submit to the lender. I would like to find a realtor who has a good working relationship with a lender who has a sizeable REO portfolio who is willing to sell the package and be done with it instead of piece mealing it out. Any ideas, names or suggestions from anyone?

I am a real estate agent, I have a client that want a Killer deal!
He wants a condo at Gaslamp Quarter 2 bed 2 bath,more than 950 SF and no more than 5 years old.
What can I do? and How this works?

I am a real estate investor, and have been commissioned to find $.50 on the dollar deals, in any area providing the contract of purchase is for at least 50 units. Any ideas or suggestions on acquiring this type of property inventory?

Pamela, those types of deals are done at the bank level where you buy a pool of properties. Overall you get a deal, but you take a few lemons as well.

Give me a call when you get a chance.

Bob
I’m thinking of buying my Dad’s house from him so that he won’t have to pay for the mortgage. If I do so, I still would like to have his name on the deed/property. If he is, would his name have to be on the first mortgage and/or LOC as well? What is the ‘category’ of ownership that allows survivorship? I also don’t want to have to worry about complications when he eventually passes away.

Great story, It is always nice to exceed a client’s expectations.. And here we are a little over a year later and the the foreclosure rate is through the roof… have you managed to find similar deals for your most recent clients?

Beth - sorry that I missed your question.

You need an estate attorney. There are more ways to screw this up than ways to get it right, so make sure you consult an estate attorney before doing this.

RJ - Yes, but the truth is that waiting until later this year is the prudent thing for most people. I just got off the phone with someone in the Navy who was looking for a bargain, but his orders have him shipping out in 3 years. Chances are that no matter what he buys today, he won’t like his equity position in 3 years.

This market may seem attractive, and many agents are screaming that at the top of their lungs (along with the latest inane commercial from NAR), but the bottom is not here yet.

The head of FreddieMac said earlier this month that he didn’t see this market hitting bottom until 2009, with ‘bubble’ markets later than that. I agree.

Anyone buying today needs to have a long term outlook. If you buy today, you have to be prepared to hold for at least 5 years.

Here is why:
if prices drop another 5% this year (a very safe bet), and drop another 5% next year, you are down 10%. You pay me to sell it and it takes another 5%. Now you are down 15% and that is conservative. If year 3 is flat, years 4 and 5 have to have 7.5% appreciation to break even in year 5.

If the drop is more than 5% per year, it can get real ugly.

So yes, I can find deals all day long. The issue is that most people looking for them shouldn’t be.

I think you hit it on the head when you mentioned that you structured the deal the way the bank wanted it. Most new real estate agents I talk with, involved in short sales etc.., have this illusion that banks accept all deals and that all they need to do is throw in an offer. I’ve heard that it hardly ever works out that way.

In addition, if the property is in a good location and will make a good investment, your competition will beat you out if they structure it the way the bank wants it structured.

At the end of the day, IMO, most foreclosures can be a good deal but it’s not like the home buyer is going to be able to sell the home for a profit next week.

Hi Bob, here is my situation. I need some advice and possibly help purchasing the condo i’m renting.

I’m renting a condo and recently the owner has default on the loan. The SD county accessor recorded NOD on 2/28/2008. It’s in preforeclosure and I would like to purchase the condo. Is it better to make an offer to the owner and do a short sale or wait for it to foreclose? The owner is behind 7-8 months of payment and how likely will the bank accept a short sale at this time?

Hi!
Your article is great, I was ondering if you could help me, I’m looking to move to San Diego and am a first time home buyer, do you know how I could find a real estate agent who can help me find a foreclosure as it seems to be the only way I can afford to live there. Thanks!
-Jaime

Hi Bob,

My fiancee and I are looking to move to Cali next year after my law school graduation here in Oklahoma. We want something in a nice location that is decent and affordable, a place where we can raise a family. I read your note to RJ and was just wondering if you think there would be a good chance for us to find a nice, pre-foreclosure place during that period? I think what you were saying is the market will continue to take a downturn. So, when do you think the best time to purchase would be and how much should we save for a downpayment. I have heard 20% is a good amount. What are your thoughts?

is it true when buying a foreclosure, that you have to have it all upfront in cash? As in “without a mortgage”?