real - Blog - REO Pro Network

Top 10 tips to win the REO multiple offer game

Posted by Patrick Schutte on April 9, 2009 at 8:00am

The REO (real estate owned) foreclosed home market is hot right now in the Prescott area with many homes priced under an already depressed market price.When banks price REOs under the market price, multiple offers are often the response. This means buyers can be up against stiff competition for that bank-owned home.It’s not unusual for some bargain-priced REO homes in the Prescott area to receive 3 or 5 offers. Sometimes the bank will throw out all but two offers and then ask the selected buyers to resubmit what is called “Highest and Final” offer. Sometimes the bank simply accepts the best offer at inception, or they can start over. Fun isn’t it?If you’re wondering how you can make your offer rise above all the rest and be the winning offer, here are the top 10 tips to win the REO multiple offer game with right packaging, price, terms and conditions:1. Know What the Bank Note Is For and What they PaidAsk your foreclosure buyer’s agent to find out the bank’s purchase price on the Trustee’s Deed. Compare that price to the price the bank is asking. Then, look at the amount of loans that were once secured to the property. Usually, the amount the bank will accept is somewhere between the original mortgage balance(s) and the foreclosure sale price. BUT, don’t put TOO much emphasis on these numbers when they are low. It a property is worth $300,000 and the bank is holding a note for only $100,000, they are not going to take $100k for it. They not not against making a profit on the rare occasion when they are not upside down. They’ll likely hold out until a reasonable offer appears.2. Know the Comparable Sales DataMake sure you know what properties have been selling for in the immediate area, both REO and traditional sales. The bank already got this data when they received their Broker Price Opinion (BPO) to determine the listing price and might have another BPO once the offers were reviewed. If the comparable sales for REOs has been $120/sqft in the neighborhood and you are offering $90/sqft, you can expect a counter at best and most likely will never hear back from the bank.3. Do an Analysis of the Listing Agent’s REO Pricing RecordMost REO agents focus as listing agents for REOs, and often they do not list any other type of property. Since REO agents deal in volume, they typically apply the same pricing principles to all their REO listings. Have your foreclosure buyer’s agent pull the history of the listing agent’s listings to determine the list-price to sales-price ratio. If most of those listings are selling for, say, 5% under list price, then you will have some guidance as to how much you need to offer.4. Know your Competition - Ask About the Number of OffersIf there are no offers on the REO home, you can probably offer less than list price and get your offer accepted. However, if there are more than two offers, you may need to offer above the asking price. If there are 10 offers, bear in mind that some of those offers might be all cash. Banks like all cash offers. If you are obtaining financing, then you may need to increase the price on your offer to be considered.5. Prepare an Offer Summary as a Cover SheetThis is aimed at simplifying the process for the Asset Manager, who, will more often than not, have 400 - 500 properties under management and often in multiple states with vastly different real estate contracts. This cover sheet will have the basics only (Price, Terms, Concessions, Closing dates, etc.).See a sample cover sheet. If you are an agent and want one emailed to you in Word format, just contact me.6. Choose a Closing Date Before the End of the MonthTry to have close of escrow on or before the 25th of the month. Banks are assessed their handling charges on the first and if they have not received the check before the end of the month then there is an additional charge for them.7. Submit Your Loan Status Report or Proof of Funds with your OfferIt goes without saying that you do not want to submit an offer without showing the REO manager that you have the means to purchase the home. If you are getting a loan, then it’s of paramount importance to submit the Loan Status Report (LSR) with your offer. If you are paying cash, you need to show proof of funds. Often buyers submit copies of money market account or bank statements (with the account numbers obscured) to show that they are capable of completing the purchase.8. Give Enough Time for the Bank to RespondUnlike homeowners who are typically working on one transaction at a time and can respond within 24 or 48 hours, REO asset managers usually hundreds of homes they are trying to dispose of. And since many of these are getting multiple offers, the amount of workload can be be overwhelming. This is why we suggest allowing 7 - 10 days as the response time on offers. Sometimes responses will come much quicker, but other times even longer. Manage your own expectations for response as well and make sure your agent is following up.Don’t take it personally when you don’t hear back…it’s not personal, it’s business!9. Don’t Try to Choose your own Title CompanyChoosing the escrow company who will help close the transaction is normally the buyer’s decision, but when buying a bank-owned home, buyers need to be flexible. One of the items that your buyer will need to be flexible about is that the bank will, more than likely, want to choose the title and escrow companies. This is due to the fact that they have significant amounts of title work done during the foreclosure process so they usually want to stay with that title company. Please be aware that many of the escrow and title companies that banks choose to use are not local, and that they are usually low bidders who are overwhelmed by transactions as well. They will have traveling notary services or local options for document signing, but don’t expect the same service you get from your favorite escrow officer. If you are an agent, take an active role in trying to help the title company get the contacts they need locally, like the HOA information, etc.10. Shorten the Inspection Period and Don’t Ask for Repairs at the Offer StageIf other buyers are asking for 15 days to conduct inspections, and you ask for 10, you will be deemed the more serious buyer. Banks, just like traditional sellers, don’t like the “Free Look” that the Arizona contract offers buyers during the inspection period. If your agent can’t make everything happen within 10 days, (home inspection, termite inspection, special inspections) ask why not. Sometimes banks will pay for repairs, but typically will not agree to do so at the offer stage. If there are serious problems are found during a home inspection, try to renegotiate after your offer has been accepted. Banks are much more likely to offer concessions once your offer is in the hopper, especially if the repairs are required as a loan condition.Bonus Tip: Offer to Split Transfer Fees if You Ask for Any Concessions at AllAs a rule, banks do not like to pay transfer fees, but if the buyer offers to split those fees, the bank will feel more amenable to accepting the offer. We suggest offering 50-50 splits on all transfer fees and do not ask for further concessions like seller paying buyer’s escrow costs, etc.Keep all of these tips in mind when you are making offers and you will experience far less frustration and and much more success when trying to buy bank-owned properties in the Prescott area.Bonus Tip #2: Write your contract in English and not legalese.Forget what the last CE instructor taught you at your renewal hours, and go back to writing the contract in plain English.Want to see an example of how not to write a contract?

Why short sales aren’t always a good deal

Posted by Patrick Schutte on April 9, 2009 at 7:58am

I have many clients who call me looking for deals on short sales and foreclosed homes in the Prescott Arizona area market including Precott Valley, Chino Valley and Dewey-Humboldt. Many think that short sales are better deals than foreclosures, but his is rarely the case.What the difference?The short sale process has many moving parts that must be aligned in order for the sale to close. First of all, the lenders have to agree to a short sale, but sometimes banks won’t agree to a short sale without an offer. This means that the home has been listing for a price that the bank hasn’t agreed to, and once the offer comes in, the bank will assign a loss mitigator to review the process. This could take several months and most likely will involve a counter offer by the bank close to the loan amount…regardless of whether or not the loan has any bearing on market value. Then the games begin.When you buy a foreclosure in the Prescott area, the process is much more straightforward and the prices are set by the bank and not a by the homeowner and REALTOR, who have nothing to lose by listing it below market value. In fact, it stimulates demand and clients for the listing agent and the homeowner thinks there is progress because people are looking at their home and making offers.That’s not to say that all short sales are not good buys. The key to success is being prepared and having a full understanding of the process.For links to more information, see my Prescott AZ Area Foreclosures Blog

MARCH MARKETING MADNESS - Investor Marketing Tips A-E

Posted by Niman @TReXGlobal on March 9, 2009 at 9:48am

MARCH MARKETING MADNESS - Investor Marketing Tips A-E

Starting March 1, investors can once again own and finance up to 10 individual properties and get Fannie Mae backed loans. The limit had been previously reduced to 4. This meant that an investor with 5 properties, great credit, and documented income could not finance an investment property without bringing in a partner or resorting to creative financing methods.

Undoubtedly, we will see increased activity from investors who had been halted by the limit.

In lieu of March Marketing Madness (a stimulus plan aimed at connecting agentswith these emerging investors), to help agents grow their business with realestate investors - every day I will post a new tip that can help you with yourinvestor clients and prospects.

Click here for tips A-Z

ADD VALUE to the service you provide.

To retain clients, gain referrals, and increase recurring business - you need to do something special to set yourself apart from your competition. There are many different ways to ADD VALUE to the service you provide for your clients, and providing resources is one of them.

Owning rental property is tough, and real estate investors have a lot of pain points - like finding a handyman and other good resources. One easy way to ADD VALUE to your services is by helping solve these pain points. You can stand out from other real estate professionals by learning about your clients' wants, identifying their obstacles and pain points - and then pointing them in the direction of resources that can help. ADD VALUE to your services by educating yourself, becoming more knowledgeable for your clients, and by exhibiting a "how can I help" mentality that will keep clients coming back to you.

BE KNOWN in the areas you want to serve.

Make it your priority to BE KNOWN in your area - you won't get very far if no one knows about your business. Get to BE KNOWN amongst all the local business owners and group leaders. Contribute to local organizations and participate in venues where you can volunteer your services. The more people who know about you and the service you provide - and the better off you'll be.

Real estate investors know what they want and don't have trouble looking for it. Very often, they will rely on their network and referrals. When a client is looking for a service in your area, you want to be at the top of the list of known individuals who can provide it. Think of this as SEO (search engine optimization) - but in real life, not on Google. When an investor wants to purchase in your area, they will search through their network first, and use the recommendation that comes their way. You want to BE KNOWN within this network that they are using to search for results.

CREATE TAB to attract Investors

Many real estate agent sites are limited because of their "for buyers" and "for sellers" appearance. CREATE an INVESTOR TAB with resources that aren't focused on an immediate real estate transaction, it will help you connect with clients on a long term.

On your "investor tab," you should provide resources that will help you connect with investor clients. Advertise services that investors might call you for. Even if you can't help with some of these services directly, you create an opportunity to connect with this client as you point them in the direction of the resource that they need.

DEVELOP RELATIONSHIPS to last a lifetime.

Your relationship with clients and prospects should go far beyond real estate. When you DEVELOP RELATIONSHIPS with your clients to let them know they are more important to you than just a real estate transaction, the business opportunities will last a lifetime.

On average, real estate investors purchase properties every 2.2 years, and 75% of their purchases are single family homes, condos and town homes. A real estate investor's concerns go far beyond the buying and selling process - and investors have a lot pain points surrounding owning and managing their real estate investments. An easy way to DEVELOP RELATIONSHIPS with these clients is by providing them with good resources that can solve these pain points. Develop a long term relationship that benefits your clients, and you will secure substantial recurring business for years to come.

EDUCATE CLIENTS to make good decisions.

EDUCATE CLIENTS, so that they can make good, informed decisions. Turn yourself into an asset by providing valuable information that helps your clients make their decisions. This is a fundamental strategy you must use to keep them coming back to you.

Clients need your help to make their decisions - they don't want you making decisions for them! A good decision is the result of having the right information and making the correct choice. Investors are long term repeat clients who know what they are looking for, and they need you to provide the right information so they can make the right choice. If you don't provide investors with information that can make them feel confident about the choices you have available, they don't have a reason to be confident in yourservices. So its important to EDUCATE CLIENTS, because providing them with good information lets them know that you are there to help them make the decisions that are right for them.

Click here for tips A-Z

How To Make Creative Real Estate Investing Work For You

Posted by NSI Consulting Group on February 17, 2009 at 6:28pm

Here's how you can make certain that creative real estate will work for you. You're taking a step that will move you from the sidelines out onto the playing field. You're making the change because you're tired of working a traditional job. Besides, you want some more excitement in your life. As a comparison let's say you've decided to take a shot at becoming a professional baseball player because you love baseball and the money players are making today seems... well, good enough to pay your bills with.To prepare you go down to the batting cages and hit balls for two weekends. To make sure you're in shape you run a few miles each day. After three weeks of this preparation you're ready for the majors... right? Of course you aren't. Becoming a success in any endeavor requires a long term commitment, a solid game plan, and a willingness to strike out a few times.As I travel across the country, I'm surprised at the number of people who are looking to get into the majors in real estate investing by trying out a new method for a few weeks to see if it will work right away for them. The bad news is that I haven't yet found a way to "get rich overnight" in real estate.The good news is that you can become a successful real estate investor much easier and quicker than you could make the majors in baseball. The only talents you'll need are desire and a determination to succeed. There are three steps that if applied will guarantee your success.Step one - Gaining KnowledgeYou're off to a good start by reading what you have in your hands right now, one of the best sources of informative articles anywhere. Read and listen to everything else you can. There are free offers for audio tapes and special reports everywhere.Call or send away for these free offers. There are numerous ways to make money in real estate and you'll get enough information from these free offers to know which area of real estate investing seems like it would be a good fit for you. After you've chosen the method you are going to pursue, get your hands on every book, audio tape or course that you can so that you can establish a good foundation of knowledge for your investing career.Next, attend a few seminars that go into greater detail so that you can fully understand how to make a living as an investor. Being able to ask questions as you're learning will allow you to learn faster and easier.Step two is - Doing.Go out and start talking to sellers to find out the difference between a motivated seller and a "I'll wait until I get everything I'm asking for" seller. Make offers on property using an agreement that has a clause that will allow you out of the deal if you need to get out. (This is called a weasel clause or "subject to" clause)It is only by getting out into the marketplace and making real offers that you will move into a position where you are gaining the experience and confidence that will sustain you for the rest of your investing life.Step three - Get Feedback.If you don't know what you did right and what could be done better, then you're not increasing your investing skills. The best critique of your deals is going to come from either a mentor or another experienced investor.Find a way to hang out with other investors. Either go to your local real estate investing group, or call up some of the other investors in your area. To find other investors just look at the "real estate wanted" section of your paper. The ads that say "I Buy Houses" will lead you to other investors.If you're worried that the other investors won't want to help you, I think you'll be suprised. There is so much opportunity out there that it is rare for two investors to be going after the same deal at the same time. To eliminate this worry completely, simply choose another nearby city, perhaps a city that's an hour or two away. Call some investors there and explain that you're just getting started in your nearby (non-competing) city. Offer to take them to lunch anywhere they choose in exchange for feedback on your deals and advice on getting started as a real estate investor.By taking these three steps, you'll be on your way to certain success if and only if you are willing to apply one final secret formula. This secret is behind the success of every single person who has ever achieved anything worth writing home about. The secret formula is this:Be willing to fail. Expect to fail. Learn from your failures.If the first deal you do doesn't work out avoid the temptation to exclaim "This just won't work for me." Or "This method must not work in my city." Is it possible that because you're just getting started perhaps you just didn't have the experience yet to keep your deal in place? The only way to get experience is by following the three steps I've explained here.Each time you "fail" you'll actually "win" as long as you ask these two questions. What did you like best about this? What can you do better next time? By consistently using these three steps multiplied by the power of this formula you'll achieve so much success as a real estate investor that people will want to know how you did it.

Fannie: Renters Can Stay in Foreclosed Home

Posted by Jason Donn on January 31, 2009 at 2:33pm

Fannie Mae announced Tuesday that it would allow qualified renters of foreclosed properties owned by a government-controlled mortgage company to stay in their homes.Under the National Real Estate Owned (REO) Rental Policy, renters of homes acquired by Fannie Mae will be offered a new monthly lease at market-rate rent or if they desire, financial aid to help them move.The properties must meet state and local building and safety codes.Fannie Mae also said it will hire real estate practitioners or property management companies to manage the properties while the units are for sale.Jason Donn

Awesome Free Map / Route Tool

Posted by John Occhi on June 1, 2008 at 9:53am

There will not be much argument from just about anyone that Google has developed some awesome free products that make the life of a real estate agents life a lot easier. On top of making so much available for free, they allow others to go ahead and enhance and customize their applications.This is such a tool.It starts with the basic Google Maps that I am sure most who read this currently use in their lives – one way or another.The company that built this free tool is Virtuoo who promotes on their website “Stuff for Realtors!” Looking around, it appears they earn their money with some pretty nice Virtual Tours.They have developed and give away for free a “Efficient Route Calculator” that allows you to enter up to 10 random addresses before you hit the ‘Submit’ button, conveniently located right below the addresses. How simple is that?The program then opens up a new page and in just a few short moments a fully expandable standard Google Map shows up, with both the Hybrid and Satellite option. The good news is all of your locations are there and mapped out – round trip!What is nice is you can even add another destination – I have not had to use this feature, but my guess is you could add an indefinite number of locations to your route.EASY DIRECTIONSBelow the map is a section they call “Computed Data”. It starts with the round trip duration and length of your trip, if you were to drive straight through. This alone makes the program worth what you paid for it. Wait a minute, it’s FREE!!! This feature makes it worth a fortune when you are doing your taxes!!!Then in Google Map familiar fashion, you are given turn by turn directions starting with your start point continuing to each location on your route, in the most efficient route. Of course, the distance on each road is included, so you have an idea how far you must go before the next turn.NOT PERFECTJust like everything else in life, this tool is not perfect – but it really does a great job working for me.First, I prefer the Firefox for my Internet Browser and when I print the highlighted line that represents my route does not print. I understand it works best with Opera web browser and works OK with both Safari and Internet Explorer.I wish I could right click and save the map as an image, but it won’t allow that. Too bad. However, I do save each map, on a daily basis, as a web page – when I go to the FILE pull down menu and select SAVE PAGE AS (Control S) and choose the ‘Web Page, complete” option to a folder I call Daily Trips in MY DOCUMENTS. I then have a folder for each month and simply name the file the current date.What’s nice is I can go in and amend routes after I have traveled them, documenting my mileage. You know for those unexpected trips to Office Depot or something that takes you an extra 5 miles out of your way – we need to account for that mileage.There are more notes that you can follow from links at the very bottom of the page, where there has been some trouble shooting discussions taking place – but for me, the only flaw is printing with Firefox. Truth be told, as long as the icons of my route destinations show up with the turn-by-turn directions, I’m a happy camper.There is also code available to add this to your website and allowing you to create a default starting position. I get in trouble when I mess with code, so I’ll just use it the way it’s published, thank you very much. (It would be a nice widget to have in my blog though, wouldn’t it?)HOW CAN THIS BENEFIT YOU?As an REO real estate agent, I see multiple uses for this program. The obvious is to take a buyer out and show several properties with a nice clean route already determined.The tool is also very helpful for managing my inspections of my REO properties, since they are scattered in a 20 mile radius I create a new list adding the property each time I have a new assignment, in a particular area. This way at $4.25 for a gallon of gas I can maximize my driving efficiency and not letting a property slip through the cracks, when I’m in the neighborhood. It also allows me to provide the same information to my contractor, so I can accurately monitor his mileage. (We have to constantly keep costs in line, don’t we?)Another use is with BPO’s. Comps are always close by and when I have the opportunity, I like to check out as many as I can. So, when I am researching a BPO, I will add the addresses of the Subject and the Comps to the grid. This way if I need a picture, I know exactly where I am going – but it really is helpful when it lets me physically check out a comp – after all, I may have a buyer if it is that good a deal.So, how can you use this to make your life as an REO Agent easier? Please go ahead and leave your comments below.John Occhi, REO REALTOR®Century 21 Crest – CrestREOJohn Occhi is a REO REALTOR® thatspecializes in the sale of bankowned homes in the Inland Empireregion of Southern California. Hehas helped many buyers acquiregreat deals on these REO homes.His company, CrestREO, the REODivision of Century 21 Crest – the77th largest C21 in the Nation, hasSold Over $1Billion in REO Sales.

How to start doing your first REO.

Posted by Jesus (Jesse) Gonzalez on May 28, 2008 at 2:04pm

As you may guess, the number 1 question I get asked is, how can I start listing REO’s? Well, if it was as simple as a “one line” answer, then everybody would be doing it however, it isn’t that simple. In this blog, I will try to break it down for you. First of all, get an education. If you have no experience what so ever, you need to at least get an education. Many different companies out there offer many different “certification / designations” however, be careful because you don’t always get what you pay for. I got my RCDPro (REO Certified Default Professional) designation through www.realestateeducate.com. I found them to be professional, organized and the information they provided was precise and accurate. They seem to be a bit expensive however, once you are certified, you are placed in their system and shopped out to their clients for consideration. I know they have some big clients, of which one is WellsFargo. You can also get educated through 1 of the 2 major Default Industry Conferences, 5 Star. They have a online course you can take as well however, I haven’t taken it myself. 5 Star has a lot of credibility in the industry so I am sure anything they offer is going to be reputable and recognized. You can get to their website by going to www.fivestarinstitute.com. Now that you have an education, it’s now time to get the office ready. Through your education process, you were most likely told about what a REOPRO Agent is going to need, make no mistake, you are going to need to have your office ready. Things like high speed internet, digital camera, scanner, email, cell phone with sms and email capability, adobe acrobat, fax, access to public records, mls, organized filling system and a reliable car are essential. Other things you will need to consider are, some Asset Managers require you add them to your E&O Insurance and have a minimum of 2 million in coverage. Some even require that you carry specific liability on your automobile as well. You will want to dedicate a credit card to your business and be prepared to spend money to preserve the property. You will be reimbursed later however, some companies take 2-3 months to reimburse and you can rack up thousand of dollar per property in maintenance, utilities, vandalism remediation, etc….. In other words, be prepared to spend, you might need to. Once the education and office are out of the way, next you need to get some experience. A lot of the older more seasoned agents tell stories about how they had to do BPO’s for years before they got their first REO. This is still true through a large part of our Industry so, you most likely are going to need to sign up with every bank you can find and offer to do BPO’s. Our industry does offer a BPO certification through NABPOP (National Association of Buyer Price Opinion Professionals) and you can access their website at www.NABPOP.com. This is a nationally recognized certification and can help significantly on your way to a REO business. Now if you have been doing BPO’s for years and still the REO seems to be elusive, then several things may be against you. First of all, keep in mind that most AM’s (Asset Managers) grade your BPO’s on a variety of metrics like, turn around speed, accuracy of information and list to sale price ratio’s. These metrics minimum standards are typically very high, for example, most lenders require a 95% or higher list to sale ratio for new agents before they will ever get a REO. It may seem a bit unfair however, it is what it is. The lesson here is to ask and you shall receive. Ask the people sending you the BPO’s and ensure you are qualified to receive a REO. If not, ask why and or what you can do to improve. If you find out all is ok and, you still haven’t gotten a REO, then more drastic steps may be in order. For those of you who have been doing BPO’s for some time and still can’t get the REO even though you are “qualified” then you may need to go the conference’s and meet the Asset Managers in person. The annual conference’s held by REOMAC and 5 Star are our nation’s largest default servicing events. This is the place where everyone comes together and networks. Here you can get one on one with these AM’s and essentially interview for the next REO. Competition is tough, every agent there is doing the same thing you are, so being the tip of the spear is critical to your success. Dress to impress, pop in a tic tac and, get ready to schmooze. If you can convince the AM to take a chance on you due to your incredible skills interviewing, then you will have succeeded where many others will fail. So there it is, part 1 of a continuing series on how to get started in the REO business. Look for more blogs in the near future. Hope it helps.

real (227)

Top 10 tips to win the REO multiple offer game

Why short sales aren’t always a good deal

MARCH MARKETING MADNESS - Investor Marketing Tips A-E

How To Make Creative Real Estate Investing Work For You

Fannie: Renters Can Stay in Foreclosed Home

Awesome Free Map / Route Tool

How to start doing your first REO.

Note: this page contains paid content.