Occupied Hubzu REO Experience

[Fauzia Jomes]

Hey guys,

Any experience with landing a bank owned property that was occupied?  If so, how did that go for you?  Interested in the good, the bad and the ugly?

Thanks in advance!

[Matthew Olszak]

@Fauzia Jomes Not specifically Hubzu, but I've brokered the buy-side for a number of "occupied, no-inspection" REOs.

First, realize that MANY people don't care when it says "NO TRESPASSING, DO NOT DISTURB OCCUPANTS". So unless you show up within hours of the listing coming on the market, expect a super-pissed occupant who won't be cooperative because 15 other people have been knocking on their door. If I can't catch the occupant early on outside of their property, I'll usually wait until we have it under contract.

If you do catch them early - be an advocate, and be sure they know you AREN'T on the bank's side. I've found these people usually have no idea their home has been listed - they obviously know its been foreclosed but not that its for sale to the public. Let them know to expect a ton of people to come knocking on their door and that they shouldn't let anyone in. Try to get a phone number and general details on the condition, but don't move in to view the interior yet. Also push for details on their plans - do they have the means to continue to rent if you plan to hold? Have they been looking and are ready to move? Stay in advocate mode - you'll be willing to work with them either transitioning to renting or moving out if the bank accepts your offer. The info you gather can help you to offer more than anyone else will because they'll be assuming the worst while you will have a better idea of how much work really will be necessary. Let them know you'll keep them updated as you get any more info on the listing status.

Then, if your offer is accepted, make the call to meet with them to discuss the status of the property. Hopefully since you've demonstrated yourself as someone concerned for them, they'll let you in to discuss that you have it under contract and what follows procedurally.

The ugly is when you have tenants who have been paying the landlord even though the bank is now the owner, or when they've received some sort of eviction letter and outright refuse contact with you.  Or, you have a completely spiteful ex-owner. At that point, you adjust your numbers to account for the eviction procedure and expect the worst inside. Pay attention to small exterior details that might give clues as to the interior condition - IE cheap deferred maintenance outside like missing railings on a porch and pealing paint usually mean the interior needs major work.