RealtyTrac - Banked owned but not for sale?

Question

Hi everyone and Happy Thanksgiving!

I was browsing Banked owned REO's on realtytrac and I noticed some are listed as "For Sale" but MOST are not.
Am I still able to make offers on the ones that are not for sale? Does that mean they are in the process of preparing it to be sold? There is no information on their site about this.

Any info would help. Thanks!

Joel Owens · Answer

Mehran,

You don't need to re-invent the wheel.What exactly are you trying to do??

Are you someone with actual cash or have some down for a loan or a late night infomercial type that has no money and is trying to be a middleman and collect a fee?

Not being snippy just seeing what you are trying to accomplish.

Realty Trac and all those sites are outdated junk.They sell subscription after usually 30 free days for highly outdated data.

With pre-foreclosures you have to remember not everyone wants to sell and also might file Bankruptcy or do a workout with the bank.

On REO's depending on your state foreclosure laws a bank may be in the process of foreclosing but because of redemption rights,legal proceedings,or title issues they have to delay listing the property for sale.

Very rarely will a bank not list a property with a broker especially on the residential side.An asset manager for a bank handling hundreds of files doesn't want to talk to you,won't talk to you,and waste time teaching a rookie with questions.

I am just giving it to you straight.If you want to be successful you have to know how the system works.

The MLS is the place to get the most up to date data period.As soon as I get a listing assignment from the bank the listing agreement has within 24hrs you have to put it in the MLS and send in proof to the AM.

Many times we don't even get the AM's e-mail.It's uploading contract on a portal and by phone.If they don't know what file you are connected to or who you are they will just delete.This is why many never answer the phone and screen their calls.Then they call back the important ones.

Some listing reo brokers will have buyers list they notify of an upcoming listing hitting the market.Sometimes if you offer and the price is good enough the AM will accept and close out the file.

Other times the AM will want the property exposed to the market for 7 to 10 days to see what kinds of offers the property attracts.

Now that is usually how national banks operate.Sometimes local and regional banks you can buy direct before they list with someone.

Also the rules are different if you buy in bulk or buy the note at a discount from a bank.

It really depends on what you are doing in how to proceed.

Jason Tropf · Answer

that inventory is referred to as 'shadow inventory'.  Google it.
you cannot buy it from the banks unless you buy it in bulk.  I've tried to the death of it.  They are sitting on ten times the amount of inventory that they actually list as REO with a realtor.  the avenue it travels is Foreclosure Auction, if no sale, it's then assigned to a real estate agent who then handles the sale in the local area.  Why it takes so long is debatable, there are conflicting answers to that question.  There are even people who claim that there is no shadow inventory.  I drive around and preview property for a living.  I'm telling you there is a ton of inventory that is owned by institutions that is not listed for sale.  If you try to buy an individual property, it never goes anywhere.  It is likely in a bulk package for sale as piece of a $10 Million bundle of defaulted, troubled assets. 
You're better off applying as a Realtor to get the REO listings from the lender and doing BPO's as a grunt to earn trust.  Then they'll list it with you and you can buy or sell them yourself that way around.  Unless you have the capital available to buy them in bulk but that's another post.

Mehran K. · Answer

Thank you Joel, thats exactly the information I was looking for. I appreciate your being direct.

As for my situation. I have money saved up for a down payment for my first home. An REO seems like a good way to find one under market value. I just want to learn more about how they work so I can get access to them to make an offer If I find one I like.

No infomercials for me haha. I'm more of the buy and hold type (my plans for the future).

Ron S. · Answer

Snake oil if you ask me...smoke and mirrors...house of cards waiting to collapse and every other metaphor. Possible? Yeah. Probable? Not even.

Phil Z. · Answer

You can find REOs for sale on the MLS or Auction sites.  It's very very rare to get off market REOs, it's not even worth trying.

What you can do .. is contact local REO Agents and see if they have any upcoming inventory that may meet your needs.  You might get an inside scoop weeks or months in advance, but it will still have to hit the MLS.  While it may give you the jollies thinking your an insider .. in reality you can just wait for it to hit the MLS.

Tania Helft · Answer

these are so old conversation. Could anyone shine the light on this subject nowadays?  I am a flipper cash buyer who is trying a different route than MLS.  There are many REO properties seating for few years, nothing done, not on the market. How can I buy them?

Mehran K. · Answer

Ah, shadow listings, that makes sense. If they flooded the market with all their REO's then prices would drop even further.

Mehran K. · Answer

Don't want to stray too far off topic, but the city I live and work in is Rent Controlled. The average 10 unit building runs well over $1M.

Joel Owens · Answer

You could rent out the rooms but then also so you get married or meet someone you then now need that space and the rental income will go away.

When do you see the market there start appreciating again.You would need to see local inventory levels and absorption rates to get an idea.

Why not get say a 10 unit apartment building?? With commercial financing you could put say 10% down.

Live in 1 then when you meet someone move out and buy a house and then now you have 10 rentals.Usually you can get a seller to carry some say 10 to 15% and you put 10% down.

You will have 9 other renters help paying your mortgage.

Many ways to go with this.

Mehran K. · Answer

Joel,

I am seriously considering an FHA loan. I am also looking into Homepath financing and Flex 97. I'm not sure if lenders are still doing the Flex 97 these days. My middle score is 754. Based on my income I would only be able to have about a $2200-2400 monthly payment so I'm looking at homes ~$400k

I'm between 2 strategies:
1) Buy a home ~$400k rent out spare rooms and I will probably be putting a little bit more of my income into the mortgage payment.

2)Buy a less expensive townhouse/condo for ~$275-300k, rent out spare rooms. Most, if not all the payment will be payed by the spare rooms. I would be able to save money quicker for new investments.

Option 1, I would have a nicer place. It would appreciate quicker/more (more investment capital down the road)
Option 2, I wouldn't have to rely on appreciation to fund my investments and would be able to save $ quicker.

What do you think? I'm open to any other perspectives about my situation ;)

RealtyTrac - Banked owned but not for sale?

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