Here is a little trick for you that I have used on Short Sales and REO for years. Put a limit on acceptance of the contract. In my contract (or if they make me use theirs I have an addendum that doest the same), it states that if they do not respond to my offer within a certain time period (in Chicago I use 3 days), then the contract is immediately voided and my earnest deposit shall be returned within 48 hours.
Combined with larger deposits (sound advise to be taken seriously), this creates urgency and scarcity on the lenders part.
I’ve found it very easy to buy REOs. Almost all of them are listed on the MLS, so all you need is a real estate agent to show you the property and to submit an offer if you’re interested.
If the bank accepts your offer (just like any other seller), the process is essentially the same…the only difference is that REOs are often sold as-is (meaning you can’t negotiate the price or terms after a contract is made) and you generally won’t get a seller’s disclosure statement.
I’m in Northern Virginia (Vienna), what part of DC is your market?
It’s easy to buy REO’s - you just have to be the highest bidder
The tough part is getting to the real deals. Many REO’s are over-priced. There are two REO’s in my town that have been on the market for 180+ days. While they gradually drop the list price in small increments - they are still significantly above my bid.
Now, the ones that are priced right have moved very quickly - usually to a direct client of the listing agent within 2 days of the listing.
Do not base your offer on the list price! They can be high or low. Become a student of your market area and get to deeply know the sale prices and market trends of your area. Then, base your offers at a significant discount to retail that will allow you to meet your objectives. i.e. if you are wholesaling to other investors - you need to ask them what they will pay, and then offer something LESS than that. If you are seeking a rental, base your offer on an acceptable cash flow and total return projection.
Posted by tampasteph on August 15, 2008 at 13:40:47:
1k is pretty standard, but I recently started offering 5k, and it definitely made a difference. I don’t have too many 5ks laying around, though, and the bank’s are taking forever to close, so that kind of limits me.