Posted by Redline on January 19, 1999 at 13:56:23:
One note: I don’t usually deal with banks so I might not be aware of the fact that unfortunately SOME banks require a certain amount of earnest money or certain paperwork. Necessary evils I guess.
Good luck,
RL
NEED HELP: FLIPPING BANK OWNED PROPERTY - Posted by Rod
Posted by Rod on January 18, 1999 at 20:26:56:
Hello,
I use realtor’s to find deals for me to wholesale or flip. I am coming across some good deals that are bank owned (REO’s) . However the agents want a larger deposit and a proof of funds.
Any suggestings with this. Thanks
Re: NEED HELP: FLIPPING BANK OWNED PROPERTY - Posted by SCook85
Posted by SCook85 on January 19, 1999 at 13:04:45:
Rod,
I can sympathize with your dilema this is what I went through all the time before. This is how I addressed it.
First of all it is not the realtor that is requiring it of you but instead the bank that owns the property. Not all banks require it but enough of them do warranting a solution.
When I first started I was making offers on the homes that did not require proof of funds or prequalification letters. I bought my first home with $200 earnest money. Most of the time there is no minimum for earnest money deposits. I know that Freddie-Mac and Fannie-Mae require $1000 here now and only one other bank has a minimum of $1000. The rest I tell $500.
I used to put my offers in on Letters of Intent. This allowed me to negotiate the deal and have it accepted prior to doing a contract and having the money. The way the process usually works is this.
I make a lowball offer on a letter of intent.
A week or two late I get a counter offer.
when I get the counter offer I start marketing to other investors knowing what my worst case scenario is (by the way if there was a realtor sign in the yard it is gone by this point, hidden in a bush or something).
I come back with another counter offer to buy time. Usually a thousand dollars more than my original offer. If I find an investor that wants the home and they tell me what they will give for it I line them up with the deal and they just pay me and the earnest money deposit. I did this for $1000 a deal when I first started. I have an understanding with 3 investors who will do this all day long with me. Basically I was bird dogging.
Now I put down my own earnest money deposit and I have 3 prequalification letters from private investors. Prequalification letters are easy to get. They usually aren’t wotrth the paper they are written on but banks who right them themselves want to see one. I can’t figure that one out.
Hope this helps. Good luck!!!
Re: NEED HELP: FLIPPING BANK OWNED PROPERTY - Posted by Redline
Posted by Redline on January 19, 1999 at 11:29:08:
As far as earnest money deposits - tell them it’s not going to happen. You’re an investor and you make lots of offers every week and you’re not going to have thousands of dollars sitting in escrow accounts all over town.
As far as proof of funds, tell them your not sure if you or your assigns (or your corporation) will take title to the property so you will NOT be providing proof of funds to anyone until AFTER the offer is accepted by them and approved by you - otherwise you’ll be wasting your time. This is assuming you’re leaving yourself ample “inspection and partner - finding” time.
This is how I would play this - others might disagree.
Good Luck,
RL
Re: NEED HELP: FLIPPING BANK OWNED PROPERTY - Posted by CTChap
Posted by CTChap on January 20, 1999 at 01:19:33:
Can you explain “prequalification letter” for me?
Thanks
Re: FLIPPING BANK OWNED PROPERTY - Posted by Rod
Posted by Rod on January 19, 1999 at 13:31:55:
THANKS for the info! I will work on getting those prequalification letters.
Rod
Re: NEED HELP: FLIPPING BANK OWNED PROPERTY - Posted by Rod
Posted by Rod on January 19, 1999 at 13:40:13:
Thanks for the info, makes a lot of sense.
This is a super site and I really appreciate all the responses.
Thanks again,
Rod