Cash Only Reo's?

Question

Recently purchased Reo Rockstar and they suggest providing a PoF from hard money lenders etc.  Most of the REO's on our MLS says CASH ONLY.  Does that mean that if I make a offer with a POF from a Hard Money lender that they won't look at it?  Or, does this mean the same thing as Cash Only?  Thanks

Stephani Davis · Answer

You can ask for a 30 day inspection period, but it will weaken your offer quite a bit.

There is a lot of competition right now for REOs, so you want to make your offer as clean as possible.  If you must use an inspection period, try to keep it short and sweet.

Steph

Steve Babiak · Answer

There is one point to keep in mind.  Some REO properties have been so trashed by former occupants (or vandals while it was vacant) that the normal banking lenders will not lend on them.  This can be one of the reasons for cash only, as they know that financing that REO is a pipe dream.

Chris OToole · Answer

Here in Houston all the deals I see as CASH ONLY are trashed. When you put a offer in here you automatically without putting any stipulations on the contract get 4 days to back out for any reason. You should be able to guess what the repairs should be..................then add 20%

Chris

Will Barnard · Answer

Carson,
50% of teh dollar does not happen to often here in CA, however, to answer your question, if you do it right, then you get in BEFORE it hits the MLS and know your repair budget going in.
You are correct that once it hits MLS, it is offer, offer, offer, accept, sold!.

I don't bring a contractor with me to every deal I look at. You think my contarctor wnats to waste time doing a ton of quotes on properties I don't even have under contract? No way! I estimate the repairs (experience has taught me how) and once I have it under contract, I use my very short inspection period to bring in my contractor to verify the repair estimates and give me a hard bid in writing.

Account Closed · Answer

Thanks for the help, Will, Steph, and Jamie!

Account Closed · Answer

So the bank generally allows you to view the property and bring a contractor along if you wanted to before hand? I guess you might have time to mess around with things like that if you got access to the deal before it hit MLS, but once it did, would there be time to walk through the place or is it just BOOM BOOM BOOM offer offer offer, SOLD?

Do you guys even care frankly what the property is like or what the repairs cost, or are you just tickled that you can get any property at 50 cents on the dollar so you don't really care?

Account Closed · Answer

If they are that strict about the offers being all cash with no contingencies whatsoever, are you still allowed to ask for a 30 day (or so) inspection period? Or is it up to you to get your contractor in there to estimate repairs, and get a CMA/find-comps BEFORE you make any offer?

Will Barnard · Answer

I can also relate to summerhomes post. I walk through a home and can just instantly add up in my head a repair estimate and I am usually right there with teh hard bid from my contractor (if we get that far).

As far as POF's, I use bank statements, stock and trust account statements, etc. showing true liquid funds. This makes MY all cash offer more appealing than the other guys who use POF's from hard money lenders which are really not all cash they are financing offers without financing contingencies. (not really the same)

Dan L. · Answer

cash means cash.  use a bank statement, IRA or brokerage statement if you can, you are not showing where the $$ is coming from, just showing you can close.  it would suck to miss a good deal on a technicality like if they don't like your POf letter for whatever reason...

as for competition, the ones that are priced right are gone in under a week here, I had several I missed before I could even get in to look.  when I was fast enough, ONCE, I put in no contingincies, all cash, 10% earnest, offered substantially over list and still got beat out.  The guy that got it paid 7k more than my offer and probably still made 40.  That makes him smart and me cheap I guess, lol.

you need speed, money, and know what your doing for those.  it probably doesn't hurt to have an inside track or to be lucky either.

the ones that are priced wrong at 2x their trashed current value will sit there for months, you have to watch for the price drops and be ready to move when the market reality and the list price get relatively close.  for some reason I've been able to make those work pretty well but it's a waiting game.

Eddie Ziv · Answer

I'm with Summerhomes on this one. However, couple of notes. First, there is a big difference between buying house for rent or to flip. To me, flipping require more attention since the work must be up to a certain standard. Same applies to a higher-end neighbourhood if rental is on your mind, However, if this is a low income neighbourhood, the standard is different. Yes, you have to make sure that it is up to code, free of hazard and all the mechanics work. Beyond that, it is all cosmetics. 
Second, when you enter the house you have to be able to determine whether the damage is new due to a frustrated home owner who just lost his /her (Mostly "his" in this case) house. Some, may strip the house, make holes in the wall, remove door jambs, etc. Or, there is a fundamental neglect, that can point out  deeper problems. rotten wood, roof that is falling apart, rusted pipes, etc. These may point out condition that would require much more extensive work and may put the worthiness of the deal in question

Cash Only Reo's?

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