REO Experience so far - Agents and Offers.
Hi Gys,
I have a day job and hoping to do some Real Estate investment. I dont have the time for reabbing, or fixing/ selling.
So I am hoping to buy REOs below market, and reselling at market to make the difference.
I am in Hudson county in NJ, lots of high-rise condos along the waterfront here. I only pick condos, because they generally dont have exterior issues like SF homes, and dont have a tonne of other hassles like sewer.
I shortlisted a few REO condos. Did the math. I figured 10-15% below market price just breaks me even - (see cost breakdown below athe bottom of the post). And then if i want to make 10% - I have to offer total 20-25% below market/ asking.
I spoke to the listing agents over the phone. My experience has been very bad. The agent tells me
outright that he wont represent me because its 20% below market.
It seems to me that the listing agent themselves - are an obstruction to this whole REO investment for resale. And wont let you do it.
I even offered him to relist with him - but he wont budge. Now, this is not just with one agent, I tried two others. They are equally or less hesitant.
To make matters worse, the banks keep giving properties to the preferred agents in this region - so its not like I can piss off one and move to another.
So overall - it seems - offering 20% below market/ list is not easy if not impossible. And the listing agents themselves are a roadblock in this process.
Two questions:
1 - Has anyone had a similar experience? Is there a way out?
2 - Assuming I have a brokerage license, can I submit the offer myself to the bank? Or do Banks only take offer via their listing agent?
3 - Will I need a Agent or Broker license, to be able to submit the offers?
Looking forward to some responses. My math for 20% below is below.
Sample Breakdown:
Condo list - 250K
Market price - 250K
Buying Closing Cost - 5000
Selling Closing Cost - 5000
Selling Commission - 6% of 250 = 15,000
Management Fee - 3 months HOA deposit - 3 x 450 = 1350
Three months vacancy period HOA - 3 x 450 = 1350
Three months vacancy period Tax - 3 x 500 = 1500
Total Cost = 30K.
Breakeven Price - 250-30 = 220K.
That's 11%of List Price.
If I want to make 10% - 25K
Offer Price = 220-25=195, say 200K
That's 20% below asking.