BiggerPockets

I was curious about this. If an REO property has been on the market for over a year, then I am going to assume that the banks are very motivated to get rid of this property.

My question is, would they still want and EMD on the property even though its been listed for 300+ days, or would they let me purchase it without the EMD. I know someone that has made an offer on million dollar REO property and he didnt put a single dollar in as a deposit. What other things can I use? Can I guarantee that I want to close within 2 weeks? Can I also consider paying all closing costs even the seller's closing cost, since I plan using transactional funding for my deals.

Has anyone tried this?

I hear you on that one Shannon. One of the investors who I spoke to said if you have a great relationship with that agent, you can get your way around it without putting no money down.

You don't have to have earnest money to submit the offer, though. Just state "earnest money to be provided by certified funds within 72 (or whatever) hours of contract acceptance". Sometimes they will want to see a copy of a personal check, but if they accept your offer, they will want a certified check.

From this and your other post it sounds like you're trying to wholesale REOs, but don't have the EM to tie the properties up. You might consider trying to find owners who will sell you their properties. That way you avoid this whole EM issue.

Most of the offers are cash offers, with closing within 2 weeks and a shorter inspection period. I do have property owners that send me properties as well, but they all are going thru the short sale process which can take time and I am constantly going back and forth with the bank to accept my offer. However, thru the time being I feel I can get an REO and try to make a quick profit while the other deals are going thru the shortsale process, but I dont have the EMD to put up yet. Some of the properties I have targeted have been on the market for 400+ days and I feel that the bank is very motivated to let them go and easily find someone to flip it to at a discount.

One thing I would like to try is to bring in a buyer and if he or she is interested then they can put down the deposit and they can cut us a check and we can close from there. That is one option I can think of. I was hoping that I can find someone that is willing try that. I am working on getting these homes at .40 to .50 cents on the dollar. I have a feeling the bank will take it just trying to get around that deposit I have to make.

I think that if you say "all cash" on the offer, they're going to expect to see a bank statement in your name (or, company name, if that's what's on the offer) showing you actually have the cash. An approval or POF from a hard money lender is not truly cash.

Cash offers seem to often require 10% earnest money. You certainly wouldn't want to include a certified check with such an offer since that ties up the money. But if the offer is accepted, you're going to have only a short time to cough up the money in certified form. If you don't, your offer's dead. And, you can forget about getting another offer accepted from that bank or listing agent.

You've picked a really tough route. Wholesaling REOs is tough, period. Trying to do it without ANY cash really puts you in a bind.

Your assumption makes sense but this week I visited REOs in NorCal that have been in the bank's foreclosed books for 2 to 4 years, they are priced at market or about 15% above (if they were in good shaped) They have squatters, structural issues, need major rehabbing ($40 to $120,000) and the listing agent told me she would NOT send the offer to the bank if it was below 80% of asking price!, that the bank expected offers at 80% to close at 90%... I don't get it.

In your second situation you are talking about acting as a Realtor or a bird dog. If you aren't licensed and you're not tying the property up yourself you could get in trouble, screwed, or both.

Yea Doug, I am doing something like that. I figure the banks might want to get rid of them since they havent sold and thats where I can come in at a low cash offer and hopefully get it for cheap. The only thing I am concerned with is having a listing agent who is a pain in the behind and causing the offer not to get accepted. I feel if it has been on the market for so long, as a listing agent, you should take what you can get on that deal and stop trying to hold out for a bigger piece of the pie.

All Im saying is that even the properties been on the market for a long time, the listing agent might make it hard to get it done.

Mark is right. We have a local bank in Wisconsin called Waterstone bank that has had all of their listings on the market for a year+. They cant afford to sell or they risk getting taken over by the Fed. Realtors have very little to do with this process.

I dont see this going well for you though. If it is listed on the MLS and it is still there after that long something is wrong and every investor knows that. I just dont see where the profit is in reselling REOs without doing anything to them. If i want an REO I will make an offer.