Making Offers on REOs

Real Estate Investor · Washington D.C. · Member since 2010 · 74 posts · 17 votes

Good Afternoon Everyone,

I recently tried to submit an offer on an Orlando foreclosure. My offer was $50K and the listing price was $75K. It had been on the market for 65 days. It needed work and it was at market value. My realtor said the price was too low and she wouldnt submit the contract. She said bank properties sell for listing price but moreso between 5-10% higher. Is this true? Or did she not want to take the commission cut?

I am fairly new in the game learning on my own by reading books from the libraries and this site. I dont have a mentor even though I wish I did and I have gone through so many real estate agents because they are either too busy or unprofessional. Most dont return my calls and emails for at least 72 hours.

So at this point I dont know what to do and I am at the point of just giving up the entire real estate thing. The one I have now I believe is lying to me. What do you all think?

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Justin S.

Residential Real Estate Agent · Chandler, AZ · Member since 2009 · 1k+ posts · 928 votes

16y

You do not need an agent to do anything. You can get copies of your state approved RE contract off the realtor's website for your state. Before you make the offer, call up the listing agent, and have them send you all the addendum's for the house. Realtor's tell you what they know, not necessary what you NEED to know.

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Justin S.
Residential Real Estate Agent · Chandler, AZ · Member since 2009 · 1k+ posts · 928 votes
16y
Your history with agents is quite common and you should not let it get to you. Most agents do not deal with investors, but the ones who do are extremely successful. Go to your local REI and see who other investors are using as their agents. If your agent will not submit offers for you, its time to drop them and get a new agent. You can also submit your own offers directly to the listing brokerage offering them to represent you as well.
2 Reply
Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
16y
Fire the buying agent!

Go direct to the listing agent instead. Almost all REO listing agents have their own website that shows the properties available through that agent. Once you know who has the listing, you make the offer directly.

If you know the property address, you can input that into realtor.com to see the listing details - but only if it has made it into the public MLS. Sounds like that is the type of property you have there anyway. Note that realtor.com will not have all of the info that you get from the MLS through an agent.

The only caveat to this approach is: the listing agent represents the seller, not you - so you must know what you are doing in making your offer.
2 Reply
Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
just another example of a lazy poor quality agent. Fire him/her, and move on. As Steve mentioned, the best strategy is to skip the buyers agents and go direct to listing brokers. Form a relationship with them and you will have better success.
Podcast Guest on Show #130
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Lisa Monroe
OP
Real Estate Investor · Washington D.C. · Member since 2010 · 74 posts · 17 votes
16y
So when I make an offer to the listing agent directly, what happens after that? I dont have all the forms and contracts.

I was told before that I needed an agent in order to make offers on REOs. Just confused.
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Justin S.
Residential Real Estate Agent · Chandler, AZ · Member since 2009 · 1k+ posts · 928 votes
16y
You do not need an agent to do anything. You can get copies of your state approved RE contract off the realtor's website for your state. Before you make the offer, call up the listing agent, and have them send you all the addendum's for the house. Realtor's tell you what they know, not necessary what you NEED to know.
5 Reply
Luis A.
Real Estate Investor · Atlanta, GA · Member since 2009 · 339 posts · 126 votes
16y
1. Change agents
2. Check in your state but in my state and agent is required to present an offer
3. Unless there is a specific rule in your state about making offer on REO you do not have to have an agent. You can make an offer directly with the agent that is listing the REO. He cannot represent you but he can put together the offer.
4. You want to have an agent so that there is someone representing you, doing the follow up and all the legwork but you don't have to have one
5. You can go to Office Depot and buy one of those generic RE forms and present your offer that way. The listing agent then would have to put it in the form required by the bank/state
6. The best option is to find an agent that works with investors, ask around...
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Khary Reynolds
Developer · Baltimore, MD · Member since 2008 · 11 posts · 17 votes
16y
Hi Lisa,

You should definitely fire your buyer's agent if they are not acting in your best interest, as this seems to be the case. You might also want to call the agent's broker and inform them that your agent is unwilling to submit your offer.

You could go directly to the listing agent and submit your offer directly through them but since they represent the seller's best interest and not your best interest, you need to make sure your are comfortable reading and interpreting all of the clauses and addendums of the contract because the listing agent is not going to look after your interests.

I would suggest finding another agent who specializes in dealing with real estate investors. They will understand what you are trying to accomplish and will work with you. It would be even better if you find a Realtor that invests in real estate themselves as this might help to increase your local network.

Hope this helps.
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Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
16y
Hi Lisa, there is very good advice above but I have a problem taking this to the next level. You need to fill out your profile! I don't know if you're in a community of 2500 , 250000 or 2M. Why would it make a difference? You're looking for a good agent, we can tell you how to find one, but if you're in a small town with 20 agents and 2 brokers, that may be impossible. Going it alone and going straight to the listing agent is what I do, it's what most seasoned investors do.Starting off, you'll need some hand holding, as pointed out above, you are not represented doing this. So, when you open your mouth, you are speaking to the seller! I don't know your level of expertise, not just in RE, but in anything, your work history will indicate to me as well as others many things about you where you are professionally, you say you're starting, but I have recently worked with a 2 attorneys who are just starting as well, maybe that is enough to say to get you to give us more information. Throw us a bone here!

As to contracts, listed properties will be placed under contract with the contracts used by the agent. REO will most likely move quickly to a contract that is required to be used by the seller, as a modification or an addendum to the original contract. In REOs, you won't be using your contract! Don't worry about contracts for REOs.

As to a mentor, there are many here who will assist you, some for nothing, some for probably big bucks. I for one, can't take the time to assist every beginning investor, especially if they are about to give up! Your mentor or coach wants to see committment. Your level of education, comprehension and even life experiences are important to convey to get a mentor who will really stick with you and help for little or nothing.

Which brings me back to your profile, it's your resume' and you are seeking a business partner when you ask for a coach or mentor. Contrary to what the gurus claim, everyone is not cut out or prepared for real estate investing. If you have difficulty in finding 25% of 125 or understanding that if you need 90,000 before a 6% real estate commission that you need to divide 90,000 by .94, any mentoring you receive may be short lived unless you pay for it.

So tell us about yourself, fill out your resume'! Bill
3 Reply
Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
Not true at all, its called dual representation. The listing broker/agent who represents the bank can also represent you as the buyer (or the broker represents teh bank and one of his agents represents you). Point being, the full 6% commission is kept inhouse and that makes brokers very happy!
Podcast Guest on Show #130
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Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
16y
Hi, yes, there is a transactional broker agency, but I don't see this in an REO as the agent/broker has already listed the property with an obligation to represent the seller. To be a transactional broker agency relationship. the seller must agree as well. The bank/servicing agent may or may not agree.

Even if the agent does act as a transactional broker, the are not allowed to advise at that point. They are to only facilitate the transaction, to complete documents, accept and submit offers, schedule closing requirements and then get paid, lol. The agent can not serve two masters. Bill
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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
Bill, I can tell you from specific persoanl experience that on every one of my REO transactions, I have used the listing broker, gone direct to him or her (as I have already formed a previous relationship with them) and they were the listing agent for the bank and also represented me as the buyer. I have done this over and over again.
Podcast Guest on Show #130
1 Reply
Lisa Monroe
OP
Real Estate Investor · Washington D.C. · Member since 2010 · 74 posts · 17 votes
16y
Originally posted by Bill Gulley:
Hi Lisa, there is very good advice above but I have a problem taking this to the next level. You need to fill out your profile! I don't know if you're in a community of 2500 , 250000 or 2M. Why would it make a difference? You're looking for a good agent, we can tell you how to find one, but if you're in a small town with 20 agents and 2 brokers, that may be impossible. Going it alone and going straight to the listing agent is what I do, it's what most seasoned investors do.Starting off, you'll need some hand holding, as pointed out above, you are not represented doing this. So, when you open your mouth, you are speaking to the seller! I don't know your level of expertise, not just in RE, but in anything, your work history will indicate to me as well as others many things about you where you are professionally, you say you're starting, but I have recently worked with a 2 attorneys who are just starting as well, maybe that is enough to say to get you to give us more information. Throw us a bone here!

As to contracts, listed properties will be placed under contract with the contracts used by the agent. REO will most likely move quickly to a contract that is required to be used by the seller, as a modification or an addendum to the original contract. In REOs, you won't be using your contract! Don't worry about contracts for REOs.

As to a mentor, there are many here who will assist you, some for nothing, some for probably big bucks. I for one, can't take the time to assist every beginning investor, especially if they are about to give up! Your mentor or coach wants to see committment. Your level of education, comprehension and even life experiences are important to convey to get a mentor who will really stick with you and help for little or nothing.

Which brings me back to your profile, it's your resume' and you are seeking a business partner when you ask for a coach or mentor. Contrary to what the gurus claim, everyone is not cut out or prepared for real estate investing. If you have difficulty in finding 25% of 125 or understanding that if you need 90,000 before a 6% real estate commission that you need to divide 90,000 by .94, any mentoring you receive may be short lived unless you pay for it.

So tell us about yourself, fill out your resume'! Bill

Thank you Bill. Thank you everyone. The information received helped alot! Bill I understand what you are saying. I am new here and did not fill out my profile. I know that I should not give up. I was told that I could go directly to the listing agent but when I did that, I was told that I needed an agent and I wasnt taken seriously. I dont want to submit my own offer and they throw it in the trash. Someone stated I could go on a website and download the contract and then call the listing agent for the addendums. It just seems as though everyone has different ways of doing things and it really confuses me. I am new in the sense that I have done only a few deals. I have made some mistakes and I learned. However I have read so many books about real estate, short sales, foreclosures, development and so on but I havent put what I have read to work and that is my problem.
0 Reply
Doug Haisten
Mobile, AL · Member since 2010 · 238 posts · 44 votes
16y
Bill:
I have seen in other forums heated debates on the issue of using the listing agent vs me having a buyer's agent. I have to admit using the listiing agent does make more sense. What is the best way to find who the listing agents are?

Doug
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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
Originally posted by Doug Haisten:
Bill:
I have seen in other forums heated debates on the issue of using the listing agent vs me having a buyer's agent. I have to admit using the listiing agent does make more sense. What is the best way to find who the listing agents are?
Doug
I am not Bill, but am in CA and can speak from personal experience. When I started, I drove my target markets up and down each streets looking for the REO homes already listed, then started making contacts with these listing brokers. As I got wiser, I found that the REO homes that did not yet have MLS signs in the yards, but many did have the 8.5 X 11 whte sheet of paper pasted in the window and or on garage gave away the fact that that home was in fact an REO not yet listed on the MLS. I would then either contact the number on the page or wait for that property to hit the MLS. It was not my intention to make bids on these properties once on the MLS, just to form the relationships. Once I had accomplished that, it was easy to see who were the big dog players and who just had a few listings here and there. I 86'd the few and kept the big dogs!
Then I made sure they LOVED me more than most.
The rest is history and now these connections allow me to cash big checks every month. :idea:

Podcast Guest on Show #130
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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
Want another idea of how to do it without having to drive the streets? (which you should do anyways to get better acquainted with your target neighborhoods)

If you do, you have to ask me first. :)
Podcast Guest on Show #130
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Joanne Freedmon
Real Estate Consultant · Member since 2009 · 24 posts · 1 vote
16y
Changing agents would be a good thing.. Search out an agent with high volume. Do a search on the forums and you will find them or contact [LINK REMOVED] and you can get an agent direct or sign up for their buyer program.
0 Reply
Des Shei
Investor · Southern CT, CT · Member since 2010 · 211 posts · 41 votes
16y
As an agent myself, i'd recommend you break that relationship with the buyer agent. They are supposed to represent your best interest which includes submitting whatever offer YOU feel is right. I've noticed some agents tend to fear REO agents because they tend to be the 'BIG DOGS" of the R.E community and don't want to piss them off. I know that's true.
1 Reply
Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
Which is just another of many, many reasons to go direct with listing borkers and skip buyer's agents. In the real world of REO buying, they have no value.
Podcast Guest on Show #130
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Matt Mathews
Real Estate Consultant · yucaipa, CA · Member since 2008 · 233 posts · 109 votes
16y
It's always great to have a lively discussion about Agents. I know where Will stands of course. We have disagreed on this subject a few times. First to address the original question. If the agent actually told you that they would not submit your offer it's because they work exclusively for the Seller-Not you the buyer. Being an Exclusive Buyer Agent, I could submit offers all day long for my Investor Clients, however, unless that property your looking at is a total mess, fixer upper, I would be remiss if I didn't advise you first, of the fact, that even though some bargains might be found in today's market, The majority of REO properties are still not being sold far below market value. There is a misconception by many buyers/Investors that banks want to dump their REO's. My data shows me that virtually all the REO properties sold in 09 were at market value. The other few sold came in at less than 5% under market. The bottom line is; That agent should have given this information first-then if you still wanted to proceed, they should have followed your request. Me personally, I would have told you that your wasting your time and you would be better off looking for motivated sellers, not Banks. Just my two cents!!
1 Reply
Lisa Monroe
OP
Real Estate Investor · Washington D.C. · Member since 2010 · 74 posts · 17 votes
16y
Thanks everyone.
0 Reply
Lisa Monroe
OP
Real Estate Investor · Washington D.C. · Member since 2010 · 74 posts · 17 votes
16y
How do I submit my offer directly to the listing agent? On my own contract with the contingencies that I want? Does it make a difference if the agent is representing a REO?

I have always gone through a buyer's agent, never to a listing agent.
0 Reply
Justin S.
Residential Real Estate Agent · Chandler, AZ · Member since 2009 · 1k+ posts · 928 votes
16y

For the contract: Get a hold of a copy of your state approved REALTOR contract. Most banks are going to require the offer be submitted on that contact. In arizona, the website is http://www.aaronline.com/. There will be a similar website for your state.

For the addendum's and where to submit it:
Call up the listing agent beforehand and have them send you the required addendum's to sign also ask for their email and fax number.

Your last question does not make sense to me, can you clarify? "Does it make a difference if the agent is representing a REO?"
1 Reply
Donna S.
Real Estate Investor · Triad, NC · Member since 2010 · 38 posts · 9 votes
16y
Lisa
I am not sure what the rules are for your state but this was my recent experience:

I found a property on HUD.gov. Liked the price. I drove over to take a look cause photos can be deceiving. Listing agent/brokers sign was in the front yard. Called her up, she was in another town approx 1 hour away so I made an offer (MY PRICE & CONTINGENCIES) over the phone. By the time I got home she had drawn up an offer using the contract required by the asset management company (READ THE FINE PRINT, THESE ARE NOT STANDARD) and faxed it to me for signing. I signed it and faxed it back. She then faxed it to the asset manager. We countered back and forth a few times by fax and eventually came to an agreement. She wrote up the agreed to contract and drove to the property for my original signature. This was the first time I met her in person and I did not see her again until the closing. Now let me tell you, this gal was a real piece of work. She was as ditzy & ignorant as the day is long and I would have never worked with her if she had not had the listing. She is required by law in this state to present any offers that she receives and she understood that since I did not have a buyers agent she would collect a 100% of the fee at the closing. NC allows dual agency but I basically acted as my own agent. However, I would never expect a listing agent to advise me on price or terms for my offer. In this type of arrangement you have to know what your doing and only use the listing agent to handle the paperwork and relay info between you and the asset manager. I hope this helps.
3 Reply
Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
16y
Lisa,

Congrats on not giving up. I know it can be hard at times. If you get to a point that your sick of dealing with agents and not being taken seriously, try working with a wholesale investor. Knowing how we operate you should not have any trouble getting a return phone call.
Curt Davis - KAIZEN Realty538 Reviews
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Lisa Monroe
OP
Real Estate Investor · Washington D.C. · Member since 2010 · 74 posts · 17 votes
16y
Originally posted by wheelhouse:

For the contract: Get a hold of a copy of your state approved REALTOR contract. Most banks are going to require the offer be submitted on that contact. In arizona, the website is http://www.aaronline.com/. There will be a similar website for your state.

For the addendum's and where to submit it:
Call up the listing agent beforehand and have them send you the required addendum's to sign also ask for their email and fax number.

Your last question does not make sense to me, can you clarify? "Does it make a difference if the agent is representing a REO?"

Thank you RubySlippers, thank you Wheelhouse. What I mean by the last question was, I was told if the agent is representing an REO, I had to use a state ceritified offer document. Not my own. With the information received, I can find my state contract. This helped alot.
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