Posted by Dave T on November 30, 2002 at 15:10:37:
While you may be correct that there may not be any other investors interested in this property, it is highly unlikely that you are the only person in the game on the second property. If that were the case, the bank would have just made a counteroffer.
Follow up on my first 3 offers!!! - Posted by Greg (CT)
Posted by Greg (CT) on November 29, 2002 at 20:39:25:
I did get a call today from the broker that there were a few responses to 2 of my offers.
Property #1 List price $42000. Offered $31,000. The bank counter offered for 35,000. I guess this means if I agree to 35K then the home would be mine.
Property #2 List price $42,500. Offered $35,000. The bank will take the highest and best offer by Monday afternoon. Which I guess means others have made offers.
She just faxes the offers to the bank no physical presentation to the REO officer.
Uh oh I may get an offer accepted :-):-)!
What do I do next?
Sincerely;
Greg
Fatal flaw in your plan . . . - Posted by JoeKaiser
Posted by JoeKaiser on November 30, 2002 at 15:20:42:
Agents and appraisers are really good at telling you what the house, fixed up, should sell for. Emphasis on “should.” Shouds come with no guarantees and any investment strategy that has you determining value by averging comps and comparing your findings with some agent’s is a disaster waiting to happen.
You don’t determine value by comps. I know most people think that’s how it’s done, but it’s not. Value is something you must know in your gut. You get that sort of knowledge by working your marketplace and paying attention to what things are going for, how long they’re on the market, and what they ultimately sell for. I know that sounds a lot like a comp to me, too, but there’s a big difference between what something looks like on paper and what it looks and feels like in the real world.
Before accepting that counter offer, I’d go out and look at a bunch of houses to confirm your figures.
Also, it’s a known fact that $20k rehabs cost $40k. I hope you’ve planned accordingly.
Also, rehabs are fun when you’re really really good at those sorts of things. When you’re not, they’re not fun and they hang around forever. I can show you a rehab that once took 17 months. The profit we thought we’d make ended up paying the interest charges. The point is, rehabs are a big deal that don’t automatically come off as planned, even for the very best of us.
Joe
ARV figures - Posted by wilrams
Posted by wilrams on November 30, 2002 at 11:37:30:
i suppose your using the FMV interchangably with the after repair value. just wondering where you got your fmv numbers. of course this is the key to everything. these numbers come from experience and skill or shelling out dollars for a pro.
if you have an offer accepted at 35K and repairs of 20K and an ARV of around 90K , thats equity of $35,000. i don’t think anyone around here could be mad at ya . good luck
ARV figures - Posted by wilrams
Posted by wilrams on November 30, 2002 at 11:37:20:
i suppose your using the FMV interchangably with the after repair value. just wondering where you got your fmv numbers. of course this is the key to everything. these numbers come from experience and skill or shelling out dollars for a pro.
if you have an offer accepted at 35K and repairs of 20K and an ARV of around 90K , thats equity of $35,000. i don’t think anyone around here could be mad at ya . good luck
Re: Follow up on my first 3 offers!!! - Posted by Greg (CT)
Posted by Greg (CT) on November 29, 2002 at 21:12:57:
Shawn:
I am working with a buy broker. Who worked with me to make 3 offers on these REO properties.
She called me back to today.
This was an update on my prior posting.
Thank you for your help
Greg
The Broker works for the Seller… - Posted by Shawn J. Dostie
Posted by Shawn J. Dostie on November 29, 2002 at 21:01:09:
What are the FMV’s for these homes? List price will burn you quickly (Typically, in my town, 7-15% over value) When you made the offer did you make it clear to the broker that your offer was the most you could offer at this time, so impress the seller that there will be no counter offers and that you were looking seriously at other properties? By the way, if the list price happened to be near the FMV did you know that at the auction it quite likely didn’t bring the minimum bid (In Ohio 66 2/3% drive by appraisal or in offer #1 $28,000.00)
You asked what to do next? First, to get the best deals, make friends with the officer in charge of liquidating bad assets. Hopefully your financing is already in order. If not, you might want to look into that area 
Good Luck,
Shawn(OH)
Re: Joe, You Are So Right!!! - Posted by Marc NJ
Posted by Marc NJ on December 01, 2002 at 19:55:54:
I agree with your statement 100%.Rehabs are not fun for the beginner, large profits are in completing rehabs, but for the beginning investor they can be a disaster. Rehabs dont ever go as planned and you’ll need substantial reserves when things go wrong.
Do you self a favor and never listen to a realtor for repaired value, do your homework.
Just the way I see it.
Good luck!
Re: ARV figures - Posted by Greg
Posted by Greg on November 30, 2002 at 12:43:01:
Thank you.
I first used an internet site to come up with the comps for the area. I took off the highest and lowest offers and averaged the rest. Then I met with my buyer broker and she used the MLS to get the comps and see what houses sold for in the area. We then compared our comps and made an offer.
Greg
Shawn’s right - Posted by IB (NJ)
Posted by IB (NJ) on November 30, 2002 at 10:10:44:
Don’t get too caught up with the fact that you got a response to your offers. Make sure the numbers make sense if you decide to accept the bank’s counter offer and list price.
Congrats and keep it going…
Re: Shawn’s right - Posted by Chris
Posted by Chris on December 01, 2002 at 01:08:53:
What is your exit strategy? If you plan to sell, what about capital gains taxes and brokerage comissions relative to FMV??
Making sense of the numbers! - Posted by Greg (CT)
Posted by Greg (CT) on November 30, 2002 at 10:31:19:
Hello:
Thank you for the reply. I do have my finances in order. The properties were listed on the MLS. I sense people are concerned that perhaps my buyer broker knows the officer and they are working hand in hand with deal? Not sure? I may benefit from having an appraisal done by a general contractor. My estimate on repairs is high.
Here are the 2 properties in question:
#1
Listing price: $42,000.00
First listed: 10/29/02
A FMV: $90,000.00
High repairs: $20,000.00
Offering: $31,000.00
Bank requires 10% down.
#2
Listed price: $42,500.00
First listed: 08/02/02
A FMV of: $90,000.00
Repairs: $28,740.00
Offering: $35,000.00
Bank requires 10% down
What others factors will help in determining if the numbers make sense?
Sincerly:
Greg
Re: Making sense of the numbers! - Posted by Shawn J. Dostie
Posted by Shawn J. Dostie on November 30, 2002 at 10:43:16:
We didn’t have that info before. If these numbers are accurate I am surprised the deals are still there. If I felt everything here was true I’d pull the trigger and quickly.
Good Luck,
Shawn(OH)
Re: Making sense of the numbers! - Posted by Pull the trigger
Posted by Pull the trigger on November 30, 2002 at 10:59:22:
Hi Shawn:
Who should I shoot? :-)! These numbers are true! So it sounds a little better once the numbers are given? My buyer broker called me yesterday.
Property #1 The bank counter offered with $35,000.00
Property #2 The bank wants the highest/best offer by noon on Monday.
What do you think?
Thank you for the feedback.
Greg
Re: Making sense of the numbers! - Posted by Dave T
Posted by Dave T on November 30, 2002 at 11:37:22:
Can you do both properties, or are you only able to handle just one?
If the answer is just one, then forget the second property and accept the bank’s counteroffer on the first.
If you get the first, and still want to go after the second you will have to submit your “best and final” offer. It seems that the bank has at least two offers in hand but both are below their “perceived” minimum price. The bank is asking all interested parties to submit their best and final offers, hoping that one of the interested parties may improve their offer. The offer resulting in the highest net sale proceeds will probably be accepted. At this time you do not know how much the other offers are, nor do you know if the other party(ies) will improve their offers at all. Furthermore, you do not know if your current offer is already the highest submitted. At this point, you are participating in a sealed auction. Knowing this, you need to figure out whether your investment criteria has room to improve your offering price, and, if so, resubmit that as your final offer.
Re: Making sense of the numbers! - Posted by Greg
Posted by Greg on November 30, 2002 at 12:46:46:
Dave:
I will accept the counter offer from the bank for the first property. The second property I will have my broker tell them that is my best offer. There may not be any other investors and it could be a strategy used by the bank to see how high I would go.
Greg