Question About REO??
I am interested in a little bit of info. I am sure that it may have been answered at one point but I have lost my ability to search the forums.
Anyway I have been looking at some REO properties and find that most of them are handle by a RE Agent, however I have found a lender here and there who intend to handle the sale of the REO's in house. So here are some questions?
1. Is it a better situation to deal with the lender directly versus lenders who use agents?
2. The bank states right on the listing "price is negotiable". Obviously this is self explanatory, but does this mean they may be willing to sell it at a good discount?
3. When purchasing a REO is it correct that I must have the financing myself to buy the property from the lender and will not be able to flip it? If so is there a workaround to this or another way to bird dog this info to an investor for a decent fee even though I won't be able to do much leg work?
4. Is there a checklist of the steps to take, to purchase REO's?
As a somewhat unrelated question, just to jog my memory (again cause I can't search for the answer), if I am flipping a property is it my job to do the "Due Diligence" on the property or does that fall an the investor?
Thanks in advance.
Andrew
1. Is it a better situation to deal with the lender directly versus lenders who use agents? I really don't know. I haven't seen a bank that does this yet. Every REO I've inspected in Dallas was marketed by a realtor asking for more than the house is worth. Generally, you can negociate down to a semi-reasonable price, but nothing I'd get happy about and post here.
2. The bank states right on the listing "price is negotiable". Obviously this is self explanatory, but does this mean they may be willing to sell it at a good discount? Yes and no. I've found that most banks want very close to FMV when they first list a property, but will back off as time goes on. On a couple REO deals I've done, it seems like they aren't worth looking at until day 100 or so.
3. When purchasing a REO is it correct that I must have the financing myself to buy the property from the lender and will not be able to flip it? If so is there a workaround to this or another way to bird dog this info to an investor for a decent fee even though I won't be able to do much leg work? I doubt they will let you have an assignment clause in the contract. They goal is to get as much money for the property as possible, and they aren't willing to split that with you. As for bird-dogging this information, most REOs are listed on the MLS and designated as such. I could pull a list in ~2 minutes from my desk so I don't know what a bird dog could bring to the table....
4. Is there a checklist of the steps to take, to purchase REO's? No, with the exception of additional forms you need to submit with the sales contract, I haven't had one that wasn't very similar to a standard purchase.
As a somewhat unrelated question, just to jog my memory (again cause I can't search for the answer), if I am flipping a property is it my job to do the "Due Diligence" on the property or does that fall an the investor? You share the responsibility. The investor is ultimately sticking his head out and you have no long term liability, but why would I want your leads if you haven't done Due Diligence? The point of having a wholesaler is so you don't have to skim through 1000 properties to find a few of value.
-Chris
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