Investor · Worcester, MA · Member since 2017 · 66 posts · 36 votes
Posted this in another forum but no attention, thought I'd try here.
I'm "backup bidder" on a xome auction. (Read: The bank bid against me and now wants me to checkout)
I'm doing a 203k loan on an REO through this auction. Xome tells me they will not extend closing timeline to 60 days. Bank tells me they need 45-60 days. Xome says no, they will take only 30 or move on. If I do the checkout process (where I put in my info and re-submit my bid) they will take it for review to see if seller accepts my offer.
If they accept and I can't close in 30 days, I lose my earnest money $2,500.
Anyone had success getting xome specifically (or other online auction house ) to extend deadline? Any other suggestions? Anyone creative that has a solution out there?
Elaine Fawcett Well that’s bs, what if they don’t change it. I know xome are best fit for PML, HML, or cash purchases. They want to move fast to make faster money since they’re a tech company not investments.
I haven't seen any online auction that hasn't been a PITA. And you're saying the bank is bidding against you... like they're just raising the bid on a property they already own? Sounds sketchy.
Seems like you're not going to be able to close this with a bank. You can use cash, hard money, or private money to acquire it, and then refinance with the bank. Might have to pay more loan costs out of pocket, but at least you get the deal.
@Elaine Fawcett I would speak to a lender who can assist with loan to get them in a timely manner. I am closing a property in 15-30 days but I am not going to a traditional bank. They usually cost more and need more paperwork (jump through) more hoops.
You're probably going to have to resort to a HML or transactional short term loan until your loan is funded, or forget this deal. I buy a lot from auction sites like Xome, and they're all set up for cash buyers with certified funds, and ready to close within 30 days. My issue is usually the opposite, I want to close faster then they are able to.
They also can bid against you for the bank until the reserve price is met, when there is one, but sometimes the bank accepts a lower bid post auction even if the reserve isn't met.
This is all disclosed in there posted bidding rules.
Good luck, but if you want this deal, contact HMLs asap.
I've been thinking of calling up a buddy who has this kind of cash to ask for a 90 day loan. My loan officer said this would not be a bad idea. Basically, here's where we're at. This is an out of the way property, not much market in this area. No activity on the property, no other bidders. We entered bid#1, bank rejected. Asked for highest and best. Entered bid#2 with 60 day close. Bank came back and said they would accept a bid $30k higher and asked us to accept or offer last/final offer. We entered bid#3, lower than bank's "lowest" - now waiting on answer. My thought is to have a HML come in for cash and just scoop it - but I really only want the loan for 90 days - that's how long my loan officer says we'll need to close with 203k after cash buyer. If my buddy says he's not interested, where do I go to find a HML??? I know there are some on this site. ;)
Getting a 203K loan closed within 30 days on an REO is less probable than Cleveland winning the Super Bowl this year
2 things I would clarify with your loan officer before moving forward would be:
-While you can Refi into a 203K, I would want to make sure of the proper structure to do so. Also, does the original loan from your friend need to have seasoning before a refi can happen?
- Is a 203K subject to the 90 day FHA Anti-flip rule? Your lender will know what this is
I had this exact thing happen to me with a home I won the bid for on Hubzu. I had financing lined up with a mortgage company before winning the bid. After winning the bid and during the process of the loan, the appraisal came back and they realized it was in worse shape than expected and denied me the loan. I ended up having to find hard money which if this is your first investment, you will likely find it is harder than originally expected. One started communication with me and eventually stopped responding. Good thing I had contacted multiple hml lenders. I had a few tell me that they didn't deal with first time investors. I eventually found one that worked for me but their timeline (end up taking closer to 7 weeks due to other appraisal issues) pushed it out much further than I was originally expecting. I was dealing with the Title Company that is partnered with Hubzu. I had to ask at least 3 different times to push the closing date. Fortunately my realtor reached out to the realtor representing this home. They basically said that as long as it looked like I was going to close they would give me time. I think this had to do with fact that this was the 2nd time on hubzu. The first time I was outbid and lost to another bidder who bid about 30k higher than I won it at. I'm guessing they couldn't get the deal done due to similar issues I had. Since the hard money loan was a high interest rate loan, I ended up contacting a local bank about a month later and got it refi'd into a rate half what the hml charged and got a construction loan to go along with it. I actually wish I had contacted them first and saved the costs and time associated with the hard money lender but I chalk it up to a learning lesson. I will say it was very stressful dealing with the Title company and not knowing if they would push the closing date. I had about 5k in earnest money I was worried about losing. This is not me telling you to do it or not do it, just wanted to details the pitfalls I went through.
Greg and Brad, both good posts. Thank you so much. Greg, I had thought of the seasoning and this is probably why he told me 90 days to refinance. My mistake, I did know about that but was thinking WITHIN 90 days, not after. As in we'd be done at the end of 90 days not beginning at 90 days to close...That's me being dumb.
Brad, that's my worry as well. The earnest money b/c they don't provide recourse... in speaking to an attorney about this, it's clear that the terms of all auctions are written for their benefit only... I have to wonder how long this will continue before a class action changes the business model. It does seem that is how our society is working now a days. I've heard from so many people who bid on auctions, financing falls through and auction house keeps earnest money. I have to wonder how much of their business this represents .
@Elaine Fawcett I tried to bid on a Xome home and after I lost the bid they did a run around in me for a bit. I went from losing as backup bid, to winning. Filled out the paperwork, and then the listing agent tells my agent she hasn't no idea who I am, I didn't win. So I call and confirm, then get my CC hold given back. Then a few days later another email telling me I won, fill out paperwork. Then find out it wasn't meant to go to me... the next get another email about them having issues with the selling bank, but they are pushing for my bid to be accepted (to find out, not for me again). Very annoying!!!
With that said, I actually am not against them keeping EMDs. Think about their end, if they take the property off market for months and you can't get financing, they have lost opportunities and probably money on their end. I think it helps to keep buyers honest, verse those who have no ability to buy just giving it a shot because they have no EMD to lose.
Brian, I agree with you on the EMD - if the buyer was at fault as you described. However, if they promised, as they did for me, through email to allow 60 day close and then in 30 days say time's up... in any case, there's plenty of scenarios, I believe in free market. I'm choosing to go into this with my eyes open. If I didn't like it, I have a choice not to do business with them... You certainly did get the runaround. That's shocking - I work in finance. If I accidentally awarded something to the wrong person - TWICE - my boss would have my head. Not acceptable in my book. I wouldn't do that once.
Getting a 203K loan closed within 30 days on an REO is less probable than Cleveland winning the Super Bowl this year
And you just pissed off everyone with a Cleveland keyword alert. :P
Figured I'd do it again. Too funny :-)
these companies, be it hubzu, xome, aren't flawless. the first one listed here can often be a nightmare. but i've heard different stories about them all. one of them sends out a notice saying "CONGRATULATIONS! YOU HAVE THE TOP BID!"
That doesn't mean you won. Nope. Just means that you're CURRENTLY winning, only to lose later. We discovered that the hard way.
And then good luck with Hubzu's title company. I'd certainly suggest using your home.