Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
Can we all make a pact that we will submit our highest and best when we deal with REOs? I am tired to loosing deals, bidding against myself, and the bank playing us against each other.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
15y
Originally posted by Mark Yuschak:
Will, you often preach this, but the reality is that nearly all investors do not have those "connections" you seem to have.
I imagine it's possible for anyone to build these relationships, but the bigger issue I see is that in most places I'm familiar with, REO Listing Agents are forbidden by banks from giving out pocket listings these days.
In my area, I know of a couple listing agents/brokers who basically lost their REO business by doing this, and the rest aren't going to risk their livelihood helping investors make more money.
I do know many listing agents who are happy to give me info about an upcoming listing (address, price, lockbox code), but even if I make an offer prior to it hitting the MLS, there is no way they'll submit the offer until the day it's publicly marketed.
The other thing to remember is that many of the best deals are those that are purchased after a price drop or on a property that has been sitting on the MLS for a long time (seller is more desperate to get rid of it)...so offering full-price on the initial BPO isn't going to result in a lot of great deals these days (at least not in my area).
That said, for any investors that can find agents willing and able to do pocket listings, they should certainly pursue them...I would if I could...
Real Estate Investor · Baltimore, MD · Member since 2008 · 1k+ posts · 268 votes
15y
Our friends were buying REO condo for personal residence and bumped up their offer by 14k after "give your highest and best" (from 110 to 124k which was listed price) eventhough the condo was on the market for 8 months. It works for banks very well.
Just gotta be smart to not play this game... IMO
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
I avoid this problem by buying properties before they hit the MLS.
My highest and best is always the BPO approved price, assuming that number works and it is taken because it is full ask price and all-cash.
The highest and best only occurs with MLS properties and can also be avoided by bidding on non-financable properties removing all the retail buyers.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
15y
Originally posted by Mark Yuschak:
Will, you often preach this, but the reality is that nearly all investors do not have those "connections" you seem to have.
I imagine it's possible for anyone to build these relationships, but the bigger issue I see is that in most places I'm familiar with, REO Listing Agents are forbidden by banks from giving out pocket listings these days.
In my area, I know of a couple listing agents/brokers who basically lost their REO business by doing this, and the rest aren't going to risk their livelihood helping investors make more money.
I do know many listing agents who are happy to give me info about an upcoming listing (address, price, lockbox code), but even if I make an offer prior to it hitting the MLS, there is no way they'll submit the offer until the day it's publicly marketed.
The other thing to remember is that many of the best deals are those that are purchased after a price drop or on a property that has been sitting on the MLS for a long time (seller is more desperate to get rid of it)...so offering full-price on the initial BPO isn't going to result in a lot of great deals these days (at least not in my area).
That said, for any investors that can find agents willing and able to do pocket listings, they should certainly pursue them...I would if I could...
Residential Real Estate Broker · Grand Blanc, MI · Member since 2008 · 885 posts · 316 votes
15y
J, you are right. I should have been more clear. There are no REO agents in my area that would keep a pocket listing for a straw buyer. Maybe agents in Will's area are the exception.
The agents around here will not jeapordize their relationship with the servicers by violating the rules.
Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
15y
I wasnt going to take on Will last night but I am glad someone else did. I feel like I am well connected in the banking world. There are three types of pre MLS sales that I have seen or participated in.
1.There are commercial buildings and bulk packages sold before they hit the MLS (from your posts you are not playing at that level).
2.Sometimes local banks that I do business with will have something come back and will let all the local players know about it and you write sub 2 the bank taking it back. The problem with this is these type of deals are only going to be bought by a select few and we all know about them (they are not given away).
3.The last type of deal I have seen sell before it hits the MLS is sometimes a commercial broker will get a listing and have it as a single party for a period of time while the bank is sorting things out. They are usually also the PM company. The bank will let them sell it for the number they want before an auction or it gets listed on the MLS. I have bid on two of these. One was 24 units in 5 buildings and one is 67 units in three buildings. You have to take them all to be taken seriously and there is no creative BS. These are cash deals.
Real Estate Consultant · Indianapolis, IN · Member since 2010 · 56 posts · 30 votes
15y
As an REO broker, I agree that very few REO brokers would be stupid enough to hold "pocket listings" in violation of their MLS rules. But while you can't violate the rules, you CAN use the rules to your advantage. In my market, when I get a listing agreement, I have 48 hours to put it in the MLSper our rules. Of course I use that 48 hours to try and get the properties sold to one of my investors. No rules violated there. Once it does hit the market, Best and Highest situations are common and really can't be avoided. If a bank has offers from two or more viable purchasers, they can either negotiate with only one purchaser and tick off the rest, or they can issue a Best and Highest counter. Most investors would be just as upset if the bank ignored their offer and countered someone else's as they would with a best and highest. At least the Best and Highest counter lets them stay in the game?
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
15y
My last offer included this, basically;
$500.00 over any offer made by a bonafide buyer's offer recieved with proof of such offer provided at closing.
The property had not been shown for a month and I looked at it Sunday, made the offer on Monday and was told there had been two other offers as others looked at it over the weekend.
And, I always require offers be accepted within a time line.
Right! My offer was accepted at the original offer made!
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
Originally posted by J Scott:
I imagine it's possible for anyone to build these relationships, but the bigger issue I see is that in most places I'm familiar with, REO Listing Agents are forbidden by banks from giving out pocket listings these days.
In my area, I know of a couple listing agents/brokers who basically lost their REO business by doing this, and the rest aren't going to risk their livelihood helping investors make more money.
Perhaps you all are misunderstanding how it works/the terms being used to explain the process. I did not use the word "pocket listing" when referring to REO's here, as I define a pocket listing as a seller with an agent representing who sends out the info to potential buyers before placing on MLS. This is usually reserved for private sells and not bank REO's.
That said, when I say I buy before it hits the MLS, what I am referring to EXACTLY is that I am made aware of the property before the listing (often just after the occupanjts have been evicted and sometimes before that), I am given access to the property to do my inspection/walkthrough, I am told what the BPO is submitted at and if that price meets an acceptable price for my purchase, I have an offer written up with all docs (POF, articles of incorporation, EMD check copy, contract) ready and waiting for the day (if and when) bank comes back with approval of that BPO price. I have even had them come back with a lower price in which we ammended offer price lower to match approved price, but not recently and not often). Then, as someone else already stated, the agent has a timeframe of when the listing must hit the MLS. The second the BPO is approved, they submit my full price and all-cash offer which is "pushed" through. The agent informs the asset manager that they hjave worked with this buyer before and he has closed everytime. They help "sell" my offer to be taken right away and it is often.
None of the brokers violate their license agreement or do anything illegal.
Then there are the direct contacts at the banks (usually asset managers) who have the ability to provide properties to me (sometimes still occupied) and deliver at a reduced price for passing on the "headache" of getting rid of the occupants. The seller is often inclined to do so as it saves them time and it saves me money.
Originally posted by Mark Yuschak:
Will, you often preach this, but the reality is that nearly all investors do not have those "connections" you seem to have.
Shame on you Mark! I am nothing special, I only have the ability and desire to form these relationships by making the other party "like me" and I do this in a variety of ways. You should know that ANYBODY here on BP can do the same if they strive for it. ANYBODY can form these relationships. It does take some luck running into the right people but luck is created from hard work and desire.
Now we have another word added in here that is incorrect. I am never a "straw buyer" (which is illegal). I am only a real buyer who intends to own the property, then re-sell it. I do so with all-cash. A "straw buyer" is a whole different can of worms.
Originally posted by Jeffrey K.:
I wasnt going to take on Will last night but I am glad someone else did. I feel like I am well connected in the banking world. There are three types of pre MLS sales that I have seen or participated in.
Come on Jeffrey, put the gloves on! I have only one hand with my broken wrist so you have a fighting chance! :lol:
In all seriousness though, there are several legal transactions that occur before or just before an MLS listing, you have described just a couple. As I stated above, no rules are broken, you could call it inside info or sweetheart deals, or whatever, but those are just terms or phrases.
Originally posted by Andy D:
But while you can't violate the rules, you CAN use the rules to your advantage. In my market, when I get a listing agreement, I have 48 hours to put it in the MLSper our rules. Of course I use that 48 hours to try and get the properties sold to one of my investors.
Investor · Little Rock, AR · Member since 2010 · 628 posts · 251 votes
15y
Originally posted by Financexaminer:
My last offer included this, basically;
$500.00 over any offer made by a bonafide buyer's offer recieved with proof of such offer provided at closing.
The property had not been shown for a month and I looked at it Sunday, made the offer on Monday and was told there had been two other offers as others looked at it over the weekend.
And, I always require offers be accepted within a time line.
Right! My offer was accepted at the original offer made!
Bill
You actually called their bluff??
There are two listings "Back on the market" this week that I lost out on after a call for "highest and best". One I lost was for full price and the other was $10k over asking. I don't know why they are back on the market. I dropped my bid by $5k on each of them. We will see.
Don
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
15y
Originally posted by Will Barnard:
Perhaps you all are misunderstanding how it works...
....
The second the BPO is approved, they submit my full price and all-cash offer which is "pushed" through.
I completely understand...and this *IS* a pocket listing -- you're offer is being submitted without the property being publicly marketed, regardless of whether it is scheduled to be publicly marketed or not in the future...
In my area, this isn't done (at least not according to the listing agents I know, which are some of the biggest)...
From what the listing agents tell me, the asset managers *REQUIRE* them -- via contract -- to publicly list the property before submitting any offers to the bank. So, while I'll often know about a listing before it hits the MLS (and will often inspect and prepare an offer), it's *NEVER* submitted to the bank prior to the day the property is listed on the MLS.
Of all the other investors I know (in various parts of the country), I've never had one tell me that they can get an REO listing agent to give them a pocket listing (i.e., to submit an offer on a property that hasn't been publicly marketed).
I'm not saying you aren't doing it...but I want to make sure that new investors don't get the impression that they will necessarily be able to do this...
You should know that ANYBODY here on BP can do the same if they strive for it.
I disagree.
I certainly don't mean this to sound as if I'm being cocky or bragging, but the truth is, if there were reasonable sized REO listing agents in my area who would be willing to submit offers to asset managers prior to the property being publicly marketed, I would know about it.
But I don't. Maybe I'm just not "in the loop," but given the relationships I do have, I would at least be aware of the fact that the "loop" existed.. :D
Investor · Westminster, CO · Member since 2009 · 1k+ posts · 1k+ votes
15y
I think one thing to keep is mind is the sheer VOLUME of REO's in Southern California. Lender's here could give every active agent 10 REO listings and not even make a dent in the inventory.
We all understand "Carrying Costs" and with Banks holding thousands of properties, each one averaging $500 a month in just Property Taxes, they just want to unload them. If a bank gets an independent BPO and then gets an offer from a buyer at that BPO price, all cash, they take it and move on to the next one.
Yes, it helps to create those relationships, but it also helps to be all cash and to have a history of always closing the sale.
"Highest and Best" is so subjective, it just gives the Bank room to maneuver. If you were a seller, would you take a price of $100,000 that had a 10% chance of closing or $90,000 that had a 90% chance of closing? For me, one is "highest" and the other is "best." Asking for "Highest and Best", the bank could turn both of them down.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
Originally posted by J Scott:
I certainly don't mean this to sound as if I'm being cocky or bragging, but the truth is, if there were reasonable sized REO listing agents in my area who would be willing to submit offers to asset managers prior to the property being publicly marketed, I would know about it.
To be clear Jason, some of the contacts I have ARE the asset managers and deliver properties prior to public for many reasons. This is done not just in CA, but all across the country. Perhaps it is more likely here due to the sheer volume we have. In addition, I also have agents who have relationships with asset managers and I get proeprties from them, some MLS listed and pulled for me and others never listed. This is fact as I experience it.
Perhaps you are not looking in the right places or asking the right questions or perhaps GA is different where nobody can get such deals. Either way, my comment of ANYBODY could do it was referring to building relationships. Deals can be made if you have the right contacts and if desired, anyone can do it. Jason has contacts and gets deals. Perhaps in different means than I, but relationships remain a strong factor.
Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
15y
Will,
I've often seen (here in CA) properties with something like the following in the private remarks:
"Days 0-7 offers will only be accepted from Non-Profit Organizations and Poorly Qualified Buyers Who Wouldn't Otherwise Have a Fighting Chance. Days 8-13 we will accept offers from Owner Occupied buyers. Days 13+ we will accept all offers."
This is more and more prevalent on REO- and while I vehemently oppose this practice how do you manage to get around it (albeit two counties north of me)?
Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
15y
Jake, those are Fanny,Freddy, and HUD homes.
Will, most of the asset managers I have talked to are located in another state (often NJ or NY). So you have found a local asset manager that will take the time to take a call from you to buy a house here and there? I am buying small packages (under 5mm) from local banks and it is a chore to even get them to talk to me. They often still use a broker to do the paperwork and show the property for a reduced or flat fee.
I don't want to start a fight, but I'm going to call you on the asset manager thing.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
Originally posted by Jeffrey K.:
So you have found a local asset manager that will take the time to take a call from you to buy a house here and there?
By all means, call me on it. To answer your question, YES, I do have them and yes, I buy from them often and not in bulk. And yes, they talk to me. I have proven myself to be a client who does what he says and performs each and every time. I have yet to back out of a deal and they love me for it.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
@Jake, yes as Jeffrey stated, those are fan/fred deals. I don't do them/ many of those will not allow non-owner occupied buyers to bid until after 30 days.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
Originally posted by Jeffrey K.:
I will buy as much as they have in zip codes 53202 and 53211 for cash. I have no problem paying you a finders fee if you can find the deals you claim.
Jeffrey, unfortunately, my contacts can only deliver in my area, not yours, otherwise, I would wholesale to you.
As for "Claim" - I have proven myself repeatedly on this board and posted actually addresses and properties I flip, so the claim is not a claim, but fact. (Since I was questioned in the past, so I proved it).
To be clear, this is not an attempt to boast or self-proclaim, just answering questions directed at me.
I am beat, going to turn in- good night all and happy investing tomorrow!
Real Estate Broker · Fort Pierce, FL · Member since 2009 · 221 posts · 95 votes
15y
What Will speaks of happens daily, if not by all reo agents/broker, at by least 99% of them. Whether it's called a pocket listings or not!
Asset managers, banks, all of the "powers to be" are aware it. And, it must be working out for their individual best interests, because you rarely see change in the reo kings/queens.
In reference to highest & best, often times you will be bidding against yourself. It is a very powerful tool for the seller to use on those that are inexperienced, unsure about themselves/offer or just because. H&B is all about getting more, especially when there are multiple buyers.
Quick story, online bidding platform has property for 98 days, no offers. My buyer ask me to make an offer. On Sunday, during the Super Bowl, I submit an offer. On Monday, an automatic email says the seller has received multiple offers, please have buyer submit H&B. My buyer stays at current offer. Property available for sale on the 105th day. What happened to the multiple offers? Not one was acceptable? Could be, but not likely.(IMO).
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
15y
Yes Brian, it might not work for others. I also failed to mention I have a stop loss amount, maximum price topay, but can only go up with proof of the other offer. I also explain it to the listing agent. Really ticked me off, but I won! LOL