How do I find properties banks want to unload?
Investor · Moon Twp, PA · Member since 2017 · 26 posts · 13 votes
I can't believe this is as simple as going into my bank and asking so what's the best way to find bank properties?
It's not. The banks want to get rid of some and keep some back. The ones that they want to get rid of they farm out to agents. The ones that they want to hold on to, you can't get. Usually. The best rental potentials their software can pinpoint go to private investment firms. It can be very hard to get those.
Occasionally, when you find the property, you find that the owner is a bank through the real estate portal.
The way you get REOs cheapest and most easily in the Pittsburgh area is just before they become REOs -- snatch them from the jaws of the system, as it were. You research mortgage foreclosures and arrange the buys on the day of the sheriff's sale in the Gold Room at the Allegheny County Courthouse. Just talk to the attorneys at the sale handling the auction buys and they'll tell you their max bid for the property. They won't be able to tell you if they're in first lien position or what (if anything) you'll owe in taxes when you buy the place. You have to do that yourself. You'll also have to outbid the other investors that are the sale who may or may not take an interest in the same property you want.
http://www.sheriffalleghenycounty.com/realestate/s...
The lists for November are out.
But the smaller banks do have lists that they will let you look at, and the bigger banks have websites that let you search for properties they're getting rid of. Here's Wells Fargo's:
https://reo.wellsfargo.com/Home-Search.aspx
It's not. The banks want to get rid of some and keep some back. The ones that they want to get rid of they farm out to agents. The ones that they want to hold on to, you can't get. Usually. The best rental potentials their software can pinpoint go to private investment firms. It can be very hard to get those.
Occasionally, when you find the property, you find that the owner is a bank through the real estate portal.
The way you get REOs cheapest and most easily in the Pittsburgh area is just before they become REOs -- snatch them from the jaws of the system, as it were. You research mortgage foreclosures and arrange the buys on the day of the sheriff's sale in the Gold Room at the Allegheny County Courthouse. Just talk to the attorneys at the sale handling the auction buys and they'll tell you their max bid for the property. They won't be able to tell you if they're in first lien position or what (if anything) you'll owe in taxes when you buy the place. You have to do that yourself. You'll also have to outbid the other investors that are the sale who may or may not take an interest in the same property you want.
http://www.sheriffalleghenycounty.com/realestate/s...
The lists for November are out.
But the smaller banks do have lists that they will let you look at, and the bigger banks have websites that let you search for properties they're getting rid of. Here's Wells Fargo's:
https://reo.wellsfargo.com/Home-Search.aspx
@Frank Adams Be careful with the sheriffs sale properties. There are good deals but there are many ways to get yourself in a real pickle. Not the place to start your investing career but a good place to end up someday once you learn the ropes. Build your team and take your time. Educate yourself and surround yourself with successful people and good things will happen.
@Alex Deacon Thanks Alex. It's mainly an interest now. I'm not ready to gamble my money at sheriff's sales yet. Appreciate the good advice.
I've worked at bank for a while now and I can't get to their REO lists LOL
Usually there are listing agents who have good relationships with that side of the bank. That's the closest you can get I think. Check the listing agent for foreclosures in your area, then email a few and build a relationship.
You can start with one county. Lets just say Franklin County OH. Goto their website: https://sheriff.franklincountyohio.gov/search/real...
Change the Auction date to 1 month from now so that gives you enough time to get the comps, getting a title report and evaluating the deal. You will see some amazing properties that you can buy even in this market.
It's not. The banks want to get rid of some and keep some back. The ones that they want to get rid of they farm out to agents. The ones that they want to hold on to, you can't get. Usually. The best rental potentials their software can pinpoint go to private investment firms. It can be very hard to get those.
Occasionally, when you find the property, you find that the owner is a bank through the real estate portal.
The way you get REOs cheapest and most easily in the Pittsburgh area is just before they become REOs -- snatch them from the jaws of the system, as it were. You research mortgage foreclosures and arrange the buys on the day of the sheriff's sale in the Gold Room at the Allegheny County Courthouse. Just talk to the attorneys at the sale handling the auction buys and they'll tell you their max bid for the property. They won't be able to tell you if they're in first lien position or what (if anything) you'll owe in taxes when you buy the place. You have to do that yourself. You'll also have to outbid the other investors that are the sale who may or may not take an interest in the same property you want.
http://www.sheriffalleghenycounty.com/realestate/s...
The lists for November are out.
But the smaller banks do have lists that they will let you look at, and the bigger banks have websites that let you search for properties they're getting rid of. Here's Wells Fargo's:
https://reo.wellsfargo.com/Home-Search.aspx
I would tend to disagree with you on the Bank's position with regards to REO's. "The best rental potentials their software can pinpoint go to private investment firms"? Um, what "software" are you referencing? We use financial models that calculate our gain on sale or REO or, additional lost against reserves already booked on REO. We don't use software to do that. We use spreadsheets and "rent potential" isn't one of the check boxes. Rents for multifamily impacts value but rent for SFR's isn't factored into any equation for valuation on a bank's modeling. The banks don't want to keep any REO's...period. Good or bad potential, if its REO, the banks want to sell them.
There are two paths to REO sales. Individual sales by agents on behalf of the bank and bulk sales. The days of walking into a bank and saying, "I'd like to buy your REO properties" are gone. With the CFPB, NPPI, BSA and every other acronym you can think of impeding a bank's ability to operate, if they want to stay in business, they are only going to sell bulk assets to institutional investors and they are only going to sell individual assets to end buyers through licensed real estate agents. The only exception would be for commercial properties.
Yes, we all read about the guy that has the REO manager for a local community bank in his back pocket but that's more legend than reality and while yes, it does happen, it only happens in very very isolated circumstances and only with very very small one or two branch local banks. And, it will only continue to happen until one of that bank's regulators or examiners shuts that down with a slam.
As far as bidding strategy? I agree with you.
OK, there's no such thing as a shadow REO inventory in this country. I've heard that industry line before multiple times in the last few years. I think we're going to have to agree to disagree on that.
https://www.aol.com/2012/07/13/shadow-reo-as-much-...
I also used to have a friend in tech who worked on a major financial institution's mortgage portfolio a few years ago. He worked on sampling and mathematical modeling to decide which REOs would be put on the market. He was trying to find properties that would have a higher potential to sell near their last selling price and which would not and should therefore be kept in the shadow inventory. One of the things he was working on was smaller multifamilies under 10 units -- trying to find the factors that would keep those properties rental potential and therefore resale value up versus those that had crashed. Redlining was openly involved. This was all contracted out, deep dark discretionary project executive spending.
I know that as of 2010, this kind of thing was still in its infancy. I don't know where it's at now. I sincerely doubt any major member of this major financial institution had a sudden change of heart and decided this was wrong and unethical to do. I do not have the faith of a priest in Christ in the moral compasses of the top private finance professionals of the USA.
OK, there's no such thing as a shadow REO inventory in this country. I've heard that industry line before multiple times in the last few years. I think we're going to have to agree to disagree on that.
https://www.aol.com/2012/07/13/shadow-reo-as-much-...
I also used to have a friend in tech who worked on a major financial institution's mortgage portfolio a few years ago. He worked on sampling and mathematical modeling to decide which REOs would be put on the market. He was trying to find properties that would have a higher potential to sell near their last selling price and which would not and should therefore be kept in the shadow inventory. One of the things he was working on was smaller multifamilies under 10 units -- trying to find the factors that would keep those properties rental potential and therefore resale value up versus those that had crashed. Redlining was openly involved. This was all contracted out, deep dark discretionary project executive spending.
I know that as of 2010, this kind of thing was still in its infancy. I don't know where it's at now. I sincerely doubt any major member of this major financial institution had a sudden change of heart and decided this was wrong and unethical to do. I do not have the faith of a priest in Christ in the moral compasses of the top private finance professionals of the USA.
...we aren't' in 2010 any longer and OP was talking about SFR, not Multi but like you said, we'll agree to disagree.
@Ron S. Looking at my question, I guess I was not clear but I was talking about MF, not SFR.
@Ron S. Looking at my question, I guess I was not clear but I was talking about MF, not SFR.
Thanks for the clarification. That said, other than the modeling, I would stand by my original statement. Considering it's MF, yes, of course they will model projected rents and solicit based on that. As I disclosed in my original post, the only change would be if it was commercial and, well, apparently, you are talking about commercial.