For about a month I've been working with a realtor making offers on REO's. all of my offers have been turned down. Depending on the property I've offered any where between 3 to 8k below asking. I have a hard money lender that i am going to be using to finance the property. My realtor thinks i am losing out on property because i am using a hard money lender. My question is have any body ever experienced a problem buying an REO property using hard money lenders?
Isit an established, legitimate HML that can be Verified? Is he giving you your pre approval? Are you showing a POF for your down payment portion?
Yes. I've done a good about of research on them. They ran my credit and I did have to provide a POF for closing before they provided me with a POF to offer / purchase.
I mean can theBank/seller verify they are legit? Are they local? They should give you a Loan Preapproval, not a POF. I also meant, are you giving your POF for your down payment, to the Bank/seller.
Oh ok sorry. I am not a 100% Sure. But on the POF letter theres contact info with an office address and web site. And no i am not providing a my down payment POF with the offer. On the POF letter that i get it refers to the funds as ( "Verification of funds to close") and that they are a licensed mortgage group. Also it states "Funding is subject to a clear and unencumbered title report and lender's appraisal of property and condition thereof".
@Hasson Bedward Are they local?!! Or, are they one of those BS Internet "private money exchange" "do hard money" sites? If the latter, the bank's know they are BS, and ignore them, along with your offer.
Yes there local here in orlando florida.
@Hasson Bedward are you making offers with a financing contingency or cash? The cheap part of town or mid range?
@John Kent all of the offers I've made have been Cash or loan with no contingency. With a 10 day inspection period and my closing dates ranged any where between 15 to 25 days from the day the offer is accepted.
IF the other offers are equal to or highest than your offer, than the Hard Money could be an issue. However, if you remove the financing contingency then you'll probably be looked at as closer to Cash than Financing.
@Hasson Bedward that sounds about right. I just had a week long fight to get an REO to resubmit my buyer's financed offer. REO can be tough. Asset managers play a lot of games to get better prices in addition to many REO listing agents being overworked and cutting corners with their work as a result. Your agent has to keep an eye on the listings and follow up the best they can within the listing agent's tolerance.
Are you shopping at the bottom of the market? If you are then consider the bottom of the market primarily a cash game where the typical buyer is showing bank statements for proof of funds.
If you are frequently being outbid then that is just part of the game. You may wish to tighten up your selection criteria.
I've had hard money offers accepted with Fannie Mae. Just some thoughts:
1) Have your agent include your proof of funds letter with every offer. They should be doing this. If your agent isn't asking for a POF to accompany every offer then maybe they aren't that familiar with how REOs work. Find an REO agent.
2) Take out any and all contingencies except 10 day inspection period.
3) Focus on price reduced REO listings. Banks are motivated sellers too. If it's been listed for a while they start to get more likely to accept below list price offers, don't expect to get below asking on a new listing. Flag the property and keep track of it. Have your agent resubmit after 30 days or after any price reduction of it's still on the market.
4) Instruct your agent to ALWAYS ask the bank's asset manager to counter if they reject your offer. Saves time in the back and forth and lets you know how willing they are to move closer to a deal. Then discuss their counter with your agent and decide what you want to offer when you resubmit.
5) one last thing, it's not uncommon to make many many many offers before getting one accepted. My mentor told me it's a ratio of 25 offers for each acceptance. So don't give up!
Hope that helps.
@Hasson Bedward , John, Anita, Wayne and Phil all gave possible reasons and/or very experienced advice. But whatever you do, don't be tempted to raise your already-established Maximum Allowable Offer just because the Bank thinks they can squeeze more out of you. Be sure of the numbers that will work for you, and stick to them.
Based on your responses about the backing you have, it maybe that your Realtor just wants to make their own job easier by getting you to either raise your Offer/s or provide the "cash" proof from your actual end-Buyer rather than your transactional-funder/possible-promise-breaker. Or, they should have just told you that history says that only one in 25 Offers will have any chance, and that patience AND multiple Offers is the name of that game. Either way, it looks like they don't have the REO experience that you deserve to find in an Agent.
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