My partner and I have flipped 3 properties during the past 8 months. We have found the best deal to date listed on Wednesday for 206,000 with an ARV 400k+. The property needs a new roof, two ceilings have severe water damage and there is some mold. It needs some additional cosmetic fixes. My partner is an GC who owned an insurance restoration company. These fixes are in his wheel house!
The bank is taking offers for 7 days. So far no has turned in a full cash offer for list price. I am turning my offer in on Monday above asking. This will be full cash offer, funds in my checking account.
Any advice on anything else I can do to get offer accepted?
Should I turn in an large deposit with the offer?
Thanks for your help.
How do you know who has offers in? Usually a bank will take final and best after the bid period? cash offers without contingencies are the strongest
Cash + short inspection window (five days) + short closing (REO realtor + get your offer in as quickly as possible = very good chance of your offer accepted.
I don't think a large deposit is necessary or a big selling point for the bank.
Be careful with an offer over asking price. It may not be necessary. Try not to let your emotions get the best of you. (easier said than done, especially for me!) The bank will likely (but you can never be 100% sure) call for "highest and best" in the event of multiple offers at full / near (+ or -) asking price.
Tip: Good communication between REO realtor and listing agent/bank = CRITICAL!!
Let me share my story-- As a newbie investor, my very first offer was on an REO condo. Mostly due my lack of experience, I choose a Redfin suggested agent (I was new to the Tampa area and didn't know anyone or about BP). He was primarily a seller's agent, which meant he had little experience working with investors and REO sales/banks. Long story short, he blew the deal (the "final and best" email got caught up in his spam mailbox and so I missed the Friday deadline), then he lied about it, then he sent me a long mea-culpa confessional email. Then, I fired him.
My first (and only so far) investment property (duplex) that I purchased last month was also REO. My agent was an REO specialist and he worked at the same brokerage as the listing agent-- so communication was simple and fast. Stay on top of your realtor and get frequent updates.
Best of luck!!
I don't know all the details of the situation, but in general, here is what I would do if this were a typical REO:
- All cash offer
- As large an EM deposit as you're comfortable with
- Full-price offer
- As few (or no) other contingencies as possible
The reason why I'd start with a full-price offer is that -- if there are multiple offers at or above list price -- it's likely the bank will come back with a request for highest-and-best. That will give you an opportunity to raise your offer if you want. But, if you're the only offer at list price, they may not ask for highest-and-best and you may save some money.
Obviously, there is some risk with that strategy, but that's what I would likely do...
Yes, large EM, No inspection contingency.
Thank you everyone for your input, two more questions:
I have never submitted an EM deposit with my offer. I know my offer is usually scanned and emailed to the buyers agent. Do I list an EM offer in the contract or should I paper clip a check to the contract?
Are they allowed to cash the check if they do not accept my offer?
From my experiences here in Connecticut as both an investor and realtor dealing with many foreclosures the following will put you in the best position.
- an all cash offer
- no contingencies
- an earnest money deposit of 10% of the offer
- offer at asking price if the numbers work of course
- a track record of getting deals to the closing table (this can be big when differentiating your offer from others in a highest and best situation)
Also, I would recommend getting the offer in ASAP.
@Michael Noto why would you need a track record when you offer all cash and no contingencies, correct me if I'm wrong but there's no out with that type of offer so who cares if you have done it before?
@Ken T. what if there are 2 identical offers with about the same EMD, cash offer, and no contingencies?
One guy has a track record of closing deals and the other doesn't, how do you think that is going to play out?
I was more talking about highest and best situations with those specific circumstances. Should have been clearer. Sorry about that.
Great answers above. I had the same question/first thought regarding the offers - how do you know what the other offers are?
Thanks for all the insight. I submitted an offer with 2 week close, 3 day inspection and 15% EM deposit. We will see what happens.
As far as how I know what other offers are, I talked to listing agent for a long time and there is more than one way to ask a question. They could be misleading me but that is part of the game I guess.
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