REO tips for a cash buying newbie?...

Real Estate Investor · Sacramento, CA · Member since 2010 · 41 posts · 11 votes

Hey all....

I'm just starting out. I'm basically just looking to get bigger pockets :)

Northern California based, I do not currently own any property & have zero debt. I have about $500k cash liquid + 100k/year++ job.

I come from a family of DIY'ers, and a couple of my family members are retired (who are very handy) are interested in helping rehab houses. Mostly for something to do... lucky me! I'm also looking for something for myself to buy and occupy.

Any hard learned tips or words of caution for the cash buying newbies here?

Also, I've noticed there are many bank sites out there that list their REO's.... are there any good (free or pay) sites out there that routinely aggregate this data? If not, I'll put something together soon (programmer!) ;)

Thanks in advance for any tips!

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J ScottPro Member

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Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes

16y

Assuming you are prepared to buy (i.e., you've done your research, have a plan in place, etc), the best advice I can give if you want to focus on REOs is to find a great buyer's agent who is experienced in working with investors and is experienced with REOs.

This person should be able to accomplish a lot of things for you:

1. Teach you the process of buying REO properties. REOs are a different beast than typical sales, so understanding the complexities of these transactions is very important;

2. Help you find properties. Most REOs are listed on the MLS, and your agent will likely understand the importance of acting fast when it comes to buying REOs. So, s/he will likely send you a daily update of the properties available, those with price drops, etc;

3. Provide comps. This agent should be able to provide you detailed comps for the houses you are considering. S/he should also be able to perform the comp analysis for you (if you don't have the experience) to help you determine an accurate ARV;

4. Due diligence. This agent should be able to help you through the due diligence process, from beginning to end.

5. A really good buyer's agent will help you evaluate specific investments and areas, and should be able to point you to properties that will prove to be good deals.

So, my best tip is to find a great buyer's agent. To do this, talk to other successful investors in your area, and be very diligent when you interview potential agents. There are a lot of bad ones out there, but the good ones are worth their weight in gold...

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Jay Gray
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Real Estate Investor · Sacramento, CA · Member since 2010 · 41 posts · 11 votes
16y
Originally posted by Francis Dai:
Jay, sounds like you're trying to pay all cash to buy property at a discount. Have you looked into buying foreclosures at auction?

You pay all cash, which is an obstacle for others but not for you. You can find properties selling for 65% of market value fairly regularly.

The fact that you have a day job is an obstacle, but one of your relatives could go and bid for you.

You need to find out how to research liens, but that's fairly easily learned.

PM me if you want to learn more. I do these in Monterey County, and can give you pointers.

Where are you investing? Sacramento?

Sacramento & Solano county. I'll drop you a PM
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Bienes Raices
Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
16y
In my limited experience in my neck of the woods, it all depends on the particular bank (or maybe where we are in the lunar cycle, lol). Some of them are very stubborn about negotiating, even if their property is in awful shape.

I've had a couple of listing agents say they will not present any offers more than 20% below list price, even with all cash.

But with cash you definitely have an advantage. I think it all depends on how patient you want to be looking for a killer deal and presenting tons of offers, or else take the standard deal somewhere between list & 20% under list.
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Bienes Raices
Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
16y
Originally posted by Steve Babiak:
Originally posted by Doug Haisten:
...
I have had the problem with listing agents not returning my calls
...

They get lots of calls from "posers" rather than "closers", and from most phone calls it's hard to determine whether the caller is one or the other, so I guess they decide to not waste time. Once you can prove you're a "closer", then your calls do get returned, and you will even get access to the properties ahead of the MLS. But you have the "chicken and egg" problem to overcome first: how do you prove you're a "closer" when you can't get the time of day? Not easy to do.

Originally posted by Doug Haisten:
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Amoung other things the buyers agent makes sure my offer is submitted to the bank.
...

This is true if the bank is using an online access website for receiving offers, and where the buyer's agent gets access to that web portal. If only the listing agent has access to that portal, or if there is no such web portal, then your offers still have to get past the listing agent.

Originally posted by Doug Haisten:
...
My experience with the buyers agents I have used is they want me to bring them the properties. I have only had a buyers agent "bring" me a property twice and thsoe were so far outside my desired property profile as to not be worth the effort for me to look at them. Do your buyers agents bring properties to you?

...

I have used MLS automated searches for this, and you'll get all kinds of crap mixed in with the goodies that way. But it's usually best for yourself to be the filter, rather than somebody else; imagine that your agent filters something that you would really have wanted, but the filter ensured you never even saw it.

This is exactly what I do, and I don't find it that time consuming. I don't want another person filtering my decisions. Anyway, a lot of times you can tell which ones are a disaster inside because they don't bother to post interior photos or even a description -- it just says "bank owned, as is"

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