My fiance seems hell bent on sending me to chase MLS listed properties. This past weekend I got us to look at the REO he found on Zillow, of which I figured might be a deal. We went out there with a contractor who is also an inspector for 203K loan properties, exactly who we needed. The REO was horribly neglected, sitting vacant at least since 2013 or longer ... which meant it needs a lot of work, $150K worth of work to be exact. The listed price was currently for $200K, but we still wanted to get 10% bellow that.
Since I am a newbie, I had to run my numbers with everything known, and finally I spent half the day getting quotes from the various types of insiurence coverages for what I'd need to rehab it, rent half of it, and live in the other half all while fully covered. By the time I got back to my agent and he contacted the listing agent, now we're told it is under contract by someone else as of earlier today. Yet, I do not see any sign of it "pending" on any public records, and wonder if the listing agent is playing games and/or will not do business with me due to currently being a tenant who is in litigation of suing that company and my landlord. What do I do to find out if it really is under contract? I'm seriously thinking about calling the bank and just asking, but is that unwise? I do not trust the listing agent nor the company they represent, as that company has proven time and time again they are crooked, especially when it comes to property management landlording. I really think they are in the business of ruining landlords so to then make even more money off of their poorly managed properties by selling, but that's just my personal bias hunch.
Also, check out my pic of us suited up in this mold infested REO lol :-) (I'm the one throwing up a peace sign).
You don't have access to the real MLS, and the sites you have access to are usually behind. They may have an acceptable offer, and it hasn't actually been signed by the bank yet.
Have your agent check the MLS to see if it's pending. Even if the listing agent is lying for whatever reason, it will just be easier to move on to another property.
True, but it had been sitting on the websites longer than it was on the MLS. I tried to explain this to both my Realtor and my fiance, as they all thought it was 19 days. Ha, it was on Trulia alone for nearly 150 days prior to this past Saturday. It is totally possible that someone finally gave a decent offer on it that the Bank accepted ... but at $200K for a Homepath property the numbers don't add up unless it goes down to $180K.
I hear that Banks still consider offers even when properties get under contract, is that true? If so, I want to know how to get my offer seen.
I will have my Agent double check by looking to see if it changed to "pending" on the MLS. Thanks!
You can always write a secondary offer now in case the first offer falls through.
Two things to keep in mind. A property is worth what someone else is willing pay for it. People overpay for REOs all the time. Zillow and Trulia are full of worthless information. When properties go to pending or back up status they will still show as active on those sites for weeks. That is why Zillow and Trulia have more properties on their site. Tons of them are already under contract. Your agent can run a history of the MLS activity. That is where the accurate information is.
Asset managers don't usually take back up offers. You can have your agent watch it to see if it changes back to active, but I suggest your move on to the next one.
@Tom Day , good idea I will let my Agent know.
@Darren Budahn , I think we should get the paperwork together just in case for this one or any other possible REO. This particular one keeps going under contract and keeps failing, one time it failed so miserably that it took an entire year for the bank to re-list it back onto the MLS. I have a feeling it will be back, as many investors will probably freak out once they see it. Our Realtor freaked out just by the fact that we had to sign a disclosure document to even see the property, as the listing Agent's company did not want to be held liable if anyone was dumb enough to enter without the proper protective gear. If I didn't know any better about how to fix this mold issue, then I would run away fast too haha especially after seeing it. Though the reality is, the cause is an easy fix and the remediation can still be done without condemning the place for tear down.
My mother is in a similar situation. Property listed for a while, no activity, price pretty high, similar property sold for less than asking, she made an offer (verbal) the same price as the similar property and the realtor tells her that its a multiple offer situation. We decide to get our own realtor to submit an offer, and then the listing agent says that they accepted an all cash offer and we didn't even get to submit a paper offer... But its still listed and not pending. Is it legal for a listing agent to lie like that and never allow her to submit an offer to the owners?
@Martin S. I wonder that myself, because what if a week goes by and my Agent finds that the MLS has yet to go to pending? I'm pretty sure this company has blacklisted me just from being a tenant who knows their Rights and demands those Rights be upheld, and I worry that such a blacklisting of my name will not allow me to do business as an investor with them. Not that I even want to, but my fiance keeps insisting that if we are buying it shouldn't matter, but I keep telling him it does matter lol. Just as I'd prefer to blacklist them as a renter and/or as a buyer, I'm sure the feeling is mutual. Which is why I'm tempted to try to talk to the bank directly instead of their Agent from this crooked company.
My Agent checked, it is true. It's now under contract. We will move on to look at other properties, but will keep an eye on it if it falls through yet again. Looks like a cash-buyer, even though the listing Agent requested Homepath 203K buyers to pick it up. Ugh, if I knew they'd favor cash I would have gotten a PML (which is what I was originally going to do until they demanded only Homepath 203K applicants). The listing agent made it sound like they didn't want a cash offer, so confusing. Next time I'll submit various offers, one in cash and another through financing regardless of what the listing Agent claims. Lesson learned.
You say the numbers don't work at $200,000 they only work at $180,000. Well, that's your opinion. You say it will take $150,000 to renovate. That's a very, very high number to renovate a home selling at $200,000. Your rehab numbers were likely way, way too high, and someone is able to get it done in the $80,000-$100,000 range, and therefore was easily able to pay $200,000.
We were quoted $130K for every single thing, including extras that we wanted like a sump pump, the mold remediation for both houses (2 came on this property) was $20K alone, @Mark Gallagher . Plus, it's not too far from the DMV area. I gave myself $150K because I wanted nice appliances etc. so I tacted-on $20K as it would be a live-in flip for us in the smaller house while we rented out the bigger house during our stay. Not to mention we cannot afford anything over a total of $350K, so sure the numbers would still work for $220K but then we couldn't buy it lol. This property, even when fixed-up, could not sell for no more than $375K in that area btw as it is a strange unique property. We weren't going to buy it as a flip though, it was going to be a buy-and-hold with one of the two houses rented out. In about 10 years we might sell it. So the fact that the market would not bare any more than $375K upon ARV didn't matter to us, except in negotiations.
Let me be real clear that this property was so unique that it would be a gamble as a flip, so it only made sense if we were going to either a) live in it or b) rent it or c) do both, live in and rent it. As it was a 2/3rd mile walk from a University. We were going to try to rent to a professor, or to an assistant, or to grad students.
I understand you were quoted $130K, but again that's one person's number. Someone else might be able to get it done for much cheaper. $20K for mold remediation again is one person's number. I can probably mold remediation done for 25% of what you can get it done for. So again, this property might work for someone else. Just saying the numbers don't work means the numbers don't work for you. On a job that large, you should have multiple bidders if you're not using a contractor that you use all the time.
I wanted to use a contract that I plan to work with in the future, but you're correct @Mark Gallagher in that I may have chosen to only have them as my mold remediators (for two houses getting mold remediation of all exterior and interior walls I figured $20K was pretty reasonable btw) and I was going to get a different contractor for the house restoration and remodel as I felt his quotes were a bit high. I'm sure I could get it knocked down to $100K in repairs, for what I'm asking for to be done. Anything less than that, would make me fearful of a botched job regarding quality. My original estimate, I personally did, had total repairs at $103K so that contractor quoted me $27K higher than I expected. I also was impressed by him but at the same time uncomfortable as he only worked with 203K loan deals on big jobs like this. What is a newbie to do though?
Mold remediation is the biggest scam going and makes me want to open a mold remediation company asap so I can charge people $20K for what will cost me about $3K to do. Mold is caused by water.. you have to stop the cause of the water which is usually pretty easy to do if it's a leaking pipe or a busted roof. Then, you remove all of the damaged materials, and depending on what happened underneath, if nothing, then you're done. Literally, that's mold remediation in a nutshell.
A newbie should never, ever, ever take on a project with repairs exceeding $100K. Everyone wants to hit that big home run right out of the gate. Take a property that needs $10K in work, will sell quickly, and you can make $10K. Those are VERY easy and VERY hard to mess up. $100K in work is just a big, big headache that should not be taken on by someone with no experience.
Hi @Amiris Brown
If this is your first purchase i wouldnt recommend starting out with a big project like that...
usually it turns out bigger than what you thought...
in any case if you really like that property and it has lots of issues i would suggest send the listing agent a backup contract. these usually fall through and you might be bae to pick it up at a lower price.
also fnme- homepath stopped negotiating high price reductions about a year ago.. but they usually have an automated system that reduce the price once a month..
also something very important to consider- if your'e planing to buy this property and keep it as a rental- because it has lots of mold you have have to get a remediation certificate that the house has been treated and clean. otherwise the tenants can hold you liable and take you to court if they feel the property still have mold ,that can be very costly...
@Mark Gallagher that part of mold remediation I know about too, and yes he was going to stop the cause of water. The water soaked into the concrete slab the house sat on as well as had major roof leaks (been vacant and decaying since 2013 after all), since the roof needed to be completely repaired (this property was in disarray lol). Anyways, our contractor was first going to tackle the water issues and then knock out every wall (which I would have requested anyways lol) as nearly every wall visibly had mold and I am highly allergic to mold.
In fact, even though I suited up I'm now having to go see my eye and health doctors as my eyes weren't 100% corrected and now I'm having allergy issues due to doing just a quick walk-through.
So while you may think it is a scam, people like me literally need to have the job done fully and at highest quality. Not only did I not want to ever have to pay for such a job involving mold ever again, I needed to be assured my health would not be at risk nor any tenants. Despite my plans on getting the house insured fully as well, regardless.
We were going to take this project on as it was a location my fiancé and I liked to live in and we liked the two houses if it was not in disarray lol, as well as the one acre of land. It was also within our $350K budget, also within our property tax budget too, and fit every criteria we'd wish for other than it not being move-in ready. In a sense it was to be our dream property at a sweet deal price lol. That's the only reason we were willing to take it on, plus it had a good cash-flow potential after its ARV was met.
@Doron Nissim , yes thank you so much! That is exactly why I found a certified and licensed mold remediation contractor with a good track record, other than just for my own peace of mind (due to my allergies). As for it being my first project and being a big one at that, I might be setting myself up for something bad or something good. I'm trying my best to cover all my bases, but getting over charged $27K from what I expected has gave me some caution but not enough for me to give up if this property comes back onto the market again.
Not sure what you're referring to when you say Fannie Mae stopped doing high level price reductions. Also, they don't have an automated system that does price reductions.
Hi mark gallagar
from my experience here in Florida and other investor friends buying and selling fnme properties for the last 10 years they are the most difficult to deal with. not investor friendly and Thier properties have the most issues.
have you bought fnme properties before? what's your experience dealing with them?
This is a Fanie Mae REO btw, @Doron Nissim .