Inside Real Estate Investing
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Joker brokers, misrepresentation of packages, unauthorized use of POF’s, POF’s that can’t be verified, ghost REO packages, bank contacts that don’t exist, incorrect protocols, NCD, MFA, LOI, POF! Arrggh! Frustrated yet? After working with REO’s for nearly two years, I have tried to cleanse myself from the woeful misconduct and misrepresentation with my 99% rule.
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Recently I received a call from a colleague regarding an REO bulk package he had received from a broker. The package was in Southern California offered at $6M or a discount of .60 of current value of $10M. My colleague asked my opinion about such a package. I told him that if it sounds too good to be true, it probably is.
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The U.S. government is taking action to speed the resale of foreclosed properties by temporarily expanding access to Federal Housing Administration mortgage insurance, U.S. housing officials said.
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When setting up your real estate investment services, there are several corporate structures you must choose from. Selecting the right one is crtical to your success. We examine the pros and cons of each one.
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Offering the lure of cheap government-guaranteed financing, the Federal Deposit Insurance Corporation moved to push its efforts to have private investors buy distressed mortgages from troubled banks. Agency officials announced that they had reached a deal to sell $1.3 billion in mortgages from Franklin Bank, a Houston-based lender that failed last November and was taken over by the F.D.I.C.
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Your a rep whose been working the phones trying to connect with sellers of large portfolios of REO assets. Your aggressive, your smart, your hip and your efforts are about to pay off. A seller finally agrees to let you represent a small pool they own. Congrats! Now what? You have buyers but have yet to sell anything and not entirely sure what the next steps should be. No problem. Let’s walk you through the steps to wealth, glory and fame (okay, maybe just the wealth part).
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You received a tape of REO properties. You’ve done an initial review and like what you see. The location is fine and the price is in line with your expectations. Now comes the time to make an offer to purchase. Depending on the types of deeds being conveyed will determine the purchasing process. Here’s a guideline of what you can expect.
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Everyone wants to be direct to the bank when buying. Who wouldn’t. You get the best deals. You negotiate directly with the bank asset manager. Properties are free and clear and you close quickly. This is what most buyers would like to hear but the reality is much different. Unless you are a large hedge fund with deep pockets and even deeper long standing relationships with banks, you will be sorely disappointed. So how does one actually buy directly from the bank. You have three choices.
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As I have mentioned in earlier postings, I am often perplexed at the amount of requests received from buyers or their reps seeking REO packages with very specific requirements. Some are so specific, that even if I had the capability to compile, most are impossible to fill. Most sellers will stay away from filling any order, even if you can proof funds for a billion. Here’s why.
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Buyers hate to bid. They want to know the price. Even when the do, a buyer will still submit an offer below the posted price. There are many reasons why buyers do this. They don’t agree with the seller’s BPO’s; their due diligence discovers the FMV is less than what the seller states; the properties are in poorer condition; perceived market fluctuations and the list goes on. One way to resolve these issues is to put it out for bid without any pricing. No! Not a bid! Why when sellers decide to put out a package for bid, buyers get revolt? Fixed price gives a buyer more control but a bid price, well, that puts the control squarely back in the seller’s hands and buyers don’t like. Believe it or not, there are more opportunities to buy via a bid then a fixed price.
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