Posted by Tommy T on April 12, 2004 at 22:49:46:
Another work-around for the assignment issue is to make the
offer as Trustee on behalf of a Land Trust. You can assign your
beneficial interest in the Land Trust outside of escrow and get
paid for that. New buyer can elect to close in the trust name or
other entity at closing. Seller isn’t likely to care what entity you
close into when the purchase funds are on the table at closing.
Anybody ever use their contracts on a bank owned… - Posted by Tom Kirby (p.a)
Posted by Tom Kirby (p.a) on April 12, 2004 at 09:10:28:
home? Or does the bank always insist on their contracts.
Thanx, Tom
Re: Anybody ever - Posted by Rob FL
Posted by Rob FL on April 13, 2004 at 21:17:48:
Use the bank’s contract if you want to get it accepted.
What’s the big deal anyway? Unless you don’t have the intentions or the ability to close, it shouldn’t be a problem.
… - Posted by jasonrei
Posted by jasonrei on April 13, 2004 at 19:15:28:
Once upon a time, an REO agent had some overpriced listings and I submitted offers on a couple, at like 75-80% of list. He cried because I was “wasting his paper and ink”- on the fax machine. In my state we have an 8-page promulgated contract. I made up this 3-pg contract, and the baby complained because he didn’t have time to review non-standard contracts.
Typically banks want to see your offer written on a promulgated contract, but I’ve heard of an investor that had success with REOs using a 1-pg letter. My experience has been that lenders almost always use their own counteroffer addendum anyway.
Re: Anybody ever use their contracts on a bank … - Posted by Pat
Posted by Pat on April 12, 2004 at 10:52:55:
My experience has always been that the lender prefers to use their own contracts. This has never been a problem since we are negotiating terms at the time we are making it out. On occasion we’ve asked to take the document home to “review” it and made it out then; only to have to alter it when we meet to sign it.
Using the lenders’ contracts usually expedites matters. It’s basically a matter of knowing what you want and what you’ll agree to. If you stick with that in mind it really doesn’t matter whose contracts you use.
Re: using own contracts on REO - Posted by Matt (MPD) IL
Posted by Matt (MPD) IL on April 12, 2004 at 09:55:32:
I’ve never seen a bank’s contract. Either they sell them through a local agent (using the standard contract for that area) or in the case of doing a short sale, I’ve used an approved local contract for the county/area I’m in. Both are typcially done in conjunction with local brokers and lawyers for the county or city.
I imagine you could submit your offer on any form you like when making an offer directly to a bank for one of its REOs if it is not already being marketed through a local agent. Just be aware that banks (probably stating the obvious) are usually very conservative and anything that looks out of the ordinary will probably just get rejected out of caution.
If you are working with a local RE atty, ask them for a copy of the approved local contract which they should have readily available. If not, they can usually get one from an agent they work with. It won’t be “buyer friendly” but any contract that is completely one-sided in my experience has been shot down and replaced with a standard contract.
Remember, you can always add as many addendums as you like for contingencies etc., when you submit your offer.
Matt MPD IL
Re: using own contracts on REO - Posted by Tom Kirby ¶
Posted by Tom Kirby ¶ on April 12, 2004 at 10:07:22:
Can I put in the addendum That I’m going to assign the contract to a rehaber that has proof of funds, and if there is any problem with the assignment, I will take the house. Would this deal be looked at differently by the bank if I do that? I mean no skin off there nose.
Thanks, Tom
Re: using own contracts on REO - Posted by Matt (MPD) IL
Posted by Matt (MPD) IL on April 12, 2004 at 10:24:02:
Assignments are typically quite difficult. You can search the archives here and see that there has been plenty of discussion on the topic of trying to assign REO property.
In my area lender owned property is all marketed through local agents and on every one of them it says “buyer must show proof of funds with all offers”. Pretty simple really, they aren’t looking at anyone who can’t prove they can perform.
So, in a short answer, it sounds typical that if you submit an offer looking to flip it, odds are they’ll reject it outright because you’re not submitting proof you can perform.
Re: using own contracts on REO - Posted by Tom Kirby ¶
Posted by Tom Kirby ¶ on April 12, 2004 at 10:37:57:
Matt, I understand that.But if I show proof of funds wouldn’t that make it different? I mean if I tell them that I plan to flip it, why should they care? I’ll back it up with money put in escrow, Save on the closing costs.
Thanx, Tom
Thanx,Tom
Re: using own contracts on REO - Posted by Kristine-CA
Posted by Kristine-CA on April 12, 2004 at 11:45:47:
Tom: try to think like the lender. Would you like to see a contract from a buyer that states he will perform and has proof of funds. Or a contract that states that the buyer has a buyer, etc., etc.
Besides, if you can close on the house yourself, as you mentioned in your addendum, why do you want to muck up the offer with the red flags of subsequent buyers? Kristine
Re: using own contracts on REO - Posted by Matt (MPD) IL
Posted by Matt (MPD) IL on April 12, 2004 at 10:54:47:
I agree with your thought, if you show proof that you can close the transaction the lender shouldn’t care whether or not you assign the contract. However, experience has shown that lenders DO care. I’m guessing that in some circumstances lenders may have been burned in the past with subsequent buyers not performing or changing the contracts after the assignment etc., and causing hassles for the lender. I’m not sure why, I don’t think any of us can be for that matter… but nevertheless it has been my experience and apparantly that of others as well that lenders do not typically like to allow assigning of contracts.
Someone else might be able to shed a better light on this as to why lenders frown on assigning.
As far as the original contract question goes, I think we’ve covered the fact that if you use any extraordinary, the bank will likely reject it on the side of caution. Your addendums can say anything you like but they won’t necessarily get your proposal accepted.
From what I’ve seen in the past (and read on CRE) it seems that a double closing is your best solution. Give yourself ample time to find a buyer before your closing with the lender and then sell the property the same day in a second transaction. Use the proceeds from the second close to pay off what you owe on the first. The first transaction is known as a “dry close”. Your title company should be more than capable of doing this for you should you decide to do it this way.
Matt MPD IL
Re: using own contracts on REO - Posted by dave
Posted by dave on April 12, 2004 at 16:10:31:
they won’t care if you’re going to flip it or not, it’s also not their business to know. they will however come back with their own addendums.
never seen it any other way
Re: using own contracts on REO - Posted by dave
Posted by dave on April 12, 2004 at 16:12:23:
ps: just add a/o/a after your name. if questioned on it, inform them that you might choose to assign the purchase to your company’s name