Oct 16 '08, 08:57 PMRight here, right now, I can almost guarantee NO ONE on these forums has had two deals in two weeks...
...fall out.
If any of my constituents has, please allow me to buy you a beer. An imported one.
It's ridiculous what's happening "out there".
In over 27 years in the business, I've never had so much business. (Well, there was that one time in the late '80's.
But THIS time it's different. Waaay different.
I know the bottom feeders are on the hunt and they're popping up everywhere. I have no problem helping them make a fortune either.
But, it seems the sellers are coming out of the ether faster than ever as well.
Deal No. 1: NPN portfolio was quoted as "X" and our investor agreed to it. As the funds were being finalized for placement into escrow, the seller (an institutional service) retracts the price of "X" and demands "Y". "Y" was nearly double the original price.
(This is where you insert egg on my face.)
Deal No. 2: A portfolio of bulk REO in the Southwest of over 250 homes. All the due diligence was completed and funds were being prepared to be deposited into escrow. The seller ( An institution) decided to remove the package in its entirety from the market.
(The egg on the face thing again.)
Now, I know what's happening. Thanks to TARP, much, if not all inventory is being frozen in its tracks. The asset managers are being told by CEO's and Stockholders to cease the hemorrhaging. The values of REO properties individually (in markets anticipated to recover first and strongest) are selling very well. Another "feeding frenzy" if you will.
Bank presidents and stockholders aren't (totally ) stupid. The logic is - "Why dump bulk at fire-sale prices when we could rapidly assimilate property individually, or in smaller numbers, into the market and recover (some of) our losses in respectable time?"
In layman's terms: Individual REO's are selling faster and for very strong price points. Ask your local realtor to pull and create a report on REO's sales in your area. DOM, Sale to List Price, then do the math.
So what's my point?
Stop chasing money and start cultivating relationships.
Money is a fickle mistress and she will not be caught...she must be attracted.
Because of the strength of my relationships with my investors, situations such these, although disappointing, are not detrimental to bringing them back to the table. They realize the sellers actions are not my fault.
So, always be honest...even when you don't know the answer. This industry changes daily. To pretend I can keep up with every nuance of all the moving parts is counter-productive. There are occasions when I carefully and diplomatically admit to a principal of a (my) particular weakness in any one area. In other words, if I don't know something, I cop to it and connect them with someone I trust who does. That's how you build bridges of trust...and those bridges are what will create a phenomenal business for you.
Lastly today, in light of the turmoil surrounding the REO and NPN portfolios, my suggestion is that you learn about CMO's. Although They can close quicker, there is a definite learning curve that is much steeper than REO and NPN. The other upside is that product is more consistently available.
