Step by step process needed for purchasing pre foreclosure and banked owned properties prior to hitting MLS once you have a list of addresses ; owner names ; and lenders :

21 Replies

Cash buyer with all the above info :

What do I do now ?

Thanks in advance :)

contact them and make your offers

Westin, you seem a little off kilter in your avatar and your question.

 The title of the thread seems to say, spoon feed me from start to finish, I don't have time to study, read, investigate, search, or do what it takes in RE to make money. Just give me the steps I need to know.

If I listed the "steps" you wouldn't be any closer to knowing anything than you do now, so I won't. But the process for ANY RE transaction can be found in ANY real estate text book for agents, such text books teach the basics which are the basis for everything done in RE, there is no strategy of any kind that can not be boiled down from the conventional way things are done. Start there, then ask specific questions.

@Jay Hinrichs  

If it's banked owned - Do I ask for a certain department ? How long does it typically take to hear a response and do they typically counter or just accept or reject ?

@Bill Gulley  

Does every response you give on every thread start off with assuming the person asking the question is a newbie with no experience wanting everything handed to them ? This is the 3rd thread I've seen you respond recently with that response.

Not a newbie -- own 9 rentals worth over 1 million. 

Have not purchased in this manner and want advice ; that's what this site is for

bank owned, prior to hitting MLS--you don't, you have to wait for it to be listed.

Pre foreclosure--you need a cooperative seller.  If there's equity, make an offer.  If upside down---get an experienced short sale agent, list it, get a contract, have it submitted to bank, wait.

Then, please be specific, what is there in the process that you are not sure of, finding REOs not listed, no secret to negotiations really, contracts are standard with addendums.

Read your question, pretty vague, as if written by a newbie.  That's why you got that response. Just as with all other broad, vague, non-specific questions asked here. I noticed the post prior to mine wasn't detailed either.

One of my bartenders has 12 houses at over 1 mil, he doesn't really know much about real estate as he inherited 10 and bought 2, he just loves bartending as a young guy and runs the bar!

My comments do not arise from a lack of consideration for the poster, as much as the lack of it for those expected to respond. :) 

@Bill Gulley  

Fair enough . I will be more specific.

I have 10 bank owned (Non MLS) properties from realtytrac.com that I would like to pursue for the chance of one of them being my next buy and hold rental. RealtyTrac lists the lender but no phone number ; many of these are large banks : How do I know who to contact and which branch to call to put in an offer ?

Also - Am I correct in assuming banks will not let me inside the property before making an offer ? If so - What is the best method to determining an appropriate offer without knowing how much damage exists that is both a good deal for me (20% after repair value equity is the goal) but not too much of a low ball to where they aren't willing to listen. (I do have MLS access so I can look up after repair property values)

Originally posted by @Westin Hudnall:

I have 10 bank owned (Non MLS) properties from realtytrac.com that I would like to pursue for the chance of one of them being my next buy and hold rental. RealtyTrac lists the lender but no phone number ; many of these are large banks : How do I know who to contact and which branch to call to put in an offer ?

As others have said, you're not going to be able to buy these properties until they hit the MLS. A couple of years ago you could go right to the asset manager pre-listing, but since the meltdown, it doesn't work that way anymore...

There is no branch in charge of these when you are talking big national banks like Wells Fargo and Citi. If the loan was FHA, I have repeatedly been told these won't be sold until posted on hudhomestore. How fresh was the foreclosure auction? If within the last month, you can try contacting the bank's attorney assuming it was a judicial foreclosure.

Wayne read more into it than I did, if it's listed, you need to contact a Realtor in your area, they can make the offer and they can get you into the property prior to making an offer, there is no circumventing the system. I assume the property is in your area and not out of state.

If you know the bank you can try a call to the asset manager, don't hold your breath, they will be listing it.

Banks are required to list REOs, one of the reasons is to cut out the chance of someone in the bank cutting a brother-in-law deal and selling below market cheating the borrower from any equity that may be due from proceeds of a sale. Properties are to be sold in an open market environment, not from back room deals.

As Wayne mentioned, prior to that, you need the owner's cooperation and payoff as a pre-foreclosure.

Another option is to find the past owner and see if they have rights of redemption, buy it from them or payoff the debt. You may need an attorney.

Easiest, just wait and use a Realtor, if you're holding you probably can do well enough at something close to the asking price, less repairs just as any other landlord may bid in. Owner occupants usually bid higher, your hope is that it will need to many repairs, if it won't appraise out for a homebuyer that puts the bank in a fire sale position, but it will be through the Realtors.

Good luck :) 

I'm no expert, but I have bought a foreclosed apartment complex from a bank.  I simply called the commercial loan officer at the bank and said I was interested in the property.  He put me in touch with the receiver who funneled what info he had to me.  I had an agreement before they listed the place.  

If the bank has already foreclosed, then they own the property and shouldn't have any problem letting you in to inspect, unless they have a liquidation strategy that precludes dealing with a mom-and-pop.

From the banks perspective, this is a soggy hunk of crap.  My experience is that they are usually pretty eager to talk to someone who is interested in taking it off their hands.

Banks can sell the property before they list it on M LS if they think the offer is a fair price, and the big banks do it all the time, and it is good to have a contact or a good working relationship with the bank.


Joe Gore

If in pre-foreclosure, you are going to need the current owner's assistance. The bank is not going to talk to you without the consent of the owner. So step one is get the owner onboard. Then, probably through the loan servicer, you can initiate short sale negotiations. There are laws around this now, and each lender will probably have a different process. (For example, here is a guide published by Wells Fargo: 

http://reo.wellsfargo.com/docs/104567_122011.pdf)

Post-foreclosure sale, the banks are pretty impossible to deal with. I tried to buy a second lien interest from a bank post-sale (I didn't want to pay full price at auction because after the first was paid I didn't think there was enough equity given condition of the house), and it took a long time to get someone on the phone who could make a decision. Calling bank 1800 numbers is a black hole. I would also not bother going through a servicer at this point, you are probably better off bugging someone at the bank in their REO department until they speak with you. I recommend jigsaw.com for looking up people in REO in the bank in question. Eventually, if you bug them enough, you will get to someone who can make a decision. In my case, the bank denied my offer (Keybank), and was eventually able to sell their interest for full price. Keep in mind that if you are offering full price, you will probably meet with more success than I did. The banks will deal with you if you talk to the right person, but getting to that person isn't easy.

Jef, that's commercial, if they get a decent offer they can dump it, there are no rights of redemption to the extent of residential, homestead exemptions applying.

BTW, guess Steve and J Scott posted while I was typing with one finger while BP was slowing text down to one letter per second and a half. I may get off, it's staring up again. Wonder if there is some kind of sloware after you get past so many words per day... LOL 

Originally posted by @Jeff J.:

I'm no expert, but I have bought a foreclosed apartment complex from a bank.  I simply called the commercial loan officer at the bank and said I was interested in the property.  He put me in touch with the receiver who funneled what info he had to me.  I had an agreement before they listed the place.  

 Commercial is different than residential, and small banks are MUCH easier to deal with than larger banks.  If you want to purchase from a small, local bank, just walk in and ask to speak to a commercial loan officer (as Jeff indicated above)...

I'm new to this process too and have been trying to get clues on how it goes. 

I've put in offers on 2 different properties and waiting for responses. The 1st being a foreclosure priced well below market and I offered slightly over the foreclosure price. I had to send an email offer directly to the listing agent and will only be contacted if the bank accepts it, no counteroffers and sale of property is as is, I also couldn't see the interior. If it's listed on mls then it's still available.

The 2nd property is a short sale also well below market, I offered the full amount through my own agent and there would be a counter in this case, i was told. 

It's been a week so I'm hoping to hear something soon. I don't know why there is such a lack of info on all these deals. 

It will help if you provided a bank statement showing you have funds to close, and they will take you serious and your offer might get accepted.


Joe Gore

Originally posted by @Westin Hudnall:

Cash buyer with all the above info :

What do I do now ?

Thanks in advance :)

I presume YOU are the adult in the photo?

Since it sounds like you've got a good start by having a few rentals, you ought to be able and willing yo get some training in the niche area(s) that most interest you.

Yes, you can learn a lot from reading discussion boards, however what separates you from others is that you DO have several nickels to rub together and are not starting from scratch. You can waste a lot of time trying to separate the BS and emotionally charged opinions from solid, factual content or search for competent training that's not merely intended to fund the lifestyle of some real estate guru-wannabe.

If I were in your shoes again, I'd spend some time committing myself to searching this and other sites for names of trainers that provide type-specific education. If it's foreclosure training, I've always been a fan of Ward Hanigan in San Diego, CA. I don't know how appropriate his training is for mortgage (vs trust deed states) however he's a great resource and an essential guy to know.

Or, you can read endless comments from people here on BP, however this is not going to provide you a step-by-step, detailed instruction as to how you should go about finding and working the deal types you seek.

@Steve Babiak  

I'm still jealous your reply vote voted up over 10 times before my forum post got removed the other day lol

Originally posted by @Joe Gore:

It will help if you provided a bank statement showing you have funds to close, and they will take you serious and your offer might get accepted.


Joe Gore

 Sent Pre approval and bank statements

@Westin Hudnall   I've been reading "How to make money on foreclosures" by Denise L.Evans, attorney at law. I've found it very informative for the step by step process. Many public libraries and Amazon.com have lots of these books that can be helpful. Jyeager

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