Whats the best way to get an REO offer accepted?

Question

How do you know where you stand with your offer? This place has been on the market for 270 days. Price started @ 435,900 and has dropped 10 times in 270 days to 269,900. needs about 45,000 in repairs and I think will ARV @ 375,000.
If this sounds like a deal what should be the offer???

Glenn  :roll:

Jeff Tumbarello · Answer

make a decent offer and go after them in the inspection period. With a home inspection report and a few contractors estimates. We got Freddie to come down last month doing that

Dave Toelkes · Answer

To have the best chance of having your less than full price offer accepted, offer to pay all cash, close in 15 days, and give proof of funds or ability to close.  No contingencies and no "and/or assigns"

Ted Harris · Answer

I had the same experience as Hal when I dealt with a bank owned property last year ($500k list, accepted $365k) ... it had been on the market over year and we closed by month's end.

Lance H. · Answer

Hey Hal,
My name is Lance, I'm in I'm just down the road from you in Woodbury.  Just curious where abouts you bought your property.  Pretty impressive deal!

Hal Cranmer · Answer

Glenn,

I just bought an REO that sold for $277 in 2006 and I got it for $97K.  It's a duplex and I am renting it out for $2000/month after putting about $12K into it.  It was a great deal.  Comps are about $170-200K.  I found that you should include in  your offer the ability to close quickly - hopefully by the end of the month.  That way the decisionmaker at the bank can get a commission for making his monthly quota.  Also, I orginally offered $103K, then submitted a supplementary offer after the inspection.  I said I found some problems (I did)  that would cost about $5K and would like that off the purchase price.  The bank agreed because they knew we were closing soon. Hope that helps!

Glenn D. · Answer

Hey Thanks Jon,

Seems like all the hard money lenders around hear are only 60 to 65% of ARV. I had one tell me there not investing in anything over 100K!

What are they doing for repair money I don't know?

Glenn D. · Answer

Rehab it....Then list it retail or rent to own.
It won't cash flow...So renting is out.....

Jon Holdman · Answer

Assuming you use hard money for the purchase, and can turn it around in six months, you should apply the 70% rule.

ARV $375K
70% of ARV $262.5K
Less repairs of $45K
Max price $217.5K

That should produce a profit of about 10-15% of ARV, so 20-30K in this case.

If you can sell it sooner, you'll save money and holding costs.

If you have cheaper money, that will save you money, too.

My experience with REOs leads me to believe the bank won't accept a $217K offer vs. a $269K listing price.  They will come down a little, but not that much.  But I've also heard people say they have managed to get very low offers accepted, especially on houses that have been on the market a long time.  You have little to lose by putting in an offer.

Jon Holdman · Answer

What's your plan for the place?