Ok, I have a buyer who is looking at a home to rehab. It is bank owned, and being sold as is. The house is a wreck and they are asking $109,000 My question is, when dealing with banks how flexible do you find them to be? Basically, the buyer wants to make an offer and get some cash back at close for the rehab. What would be a reasonable offer? Yes, I am a rookie and this is my first deal. I am sure there are a lot of variables so I am just looking for some ideas. Thanks

Tom,
You have not provided nearly enough information to even make a guess. Is your buyer looking to buy, fix & resell? or Buy Fix and live? Did you do a CMA on the property? Also do a CMA on the property as if it was in good shape How long has it been on the market? Just how much work need to be done? If neither you or the buyer have done one of these previously I suggest that the buyer get a contactor or two to do a quick estimate for the rehab. You may want to aks your broker for some assistance as this is not the ideal 1st deal for a rookie.

Thanks Paul. The property is actually for my brother. He is buying it to rehab and live in for a while. We are actually both builders so we have the estimates covered:) The homes near it are newer and in line with what he has planned. My question was mis-stated as the main thing I was curious about was do you tend to see much flexibility with banks on homes that are in need of major rehab? And my broker is going to work with me on this, I was just wanting to pick someone elses brain tonight

Tom,
That answer depends heavily on which bank or AMC has the property, how long it has been on the market and how accurate the BPO's were when it was first put on the market.

Has the property condition gotten worse since it was first on the market?

Have you done a CMA on the property to verify the list price?

Bottom line it all comes down to this make them an offer. Banks tend to love rehabbers cause they typically can close in about 10 days.

Bank owned is technically not as high-risk as going to the auction. Nonetheless, careful inspections because you are buying "as is". Banks are generally not very flexible (think trying to get a free penny or dime from one), how flexible are they? They think dollars and cents, profit margins, risks, etc.

REO's are NOT always AS-IS and depending on the AMC/Lender you may be able to get financing or make an assumption. REO's are not cut and dry... they have a full range of types, values and conditions. I have had $32,000 REO's and $1,700,000 REO's.... they were not treated the same.

If you have specific questions about an REO... simply ASK the Listing Agent what the offer guidelines are... this could not only save you a lot of time but money. The vast majority of my REO's sell well above the list price... primarily due to very direct marketing to active investors and a large database of owner/occupant buyers.

Well we are putting in an offer this afternoon. It is listed as-is but this is fine as they are buying it as a rehab. As for asking the listing agent anything, they won't give us any info. It is a 2 person office and they are completely disorganized and unprofessional. We will see how it goes. Being that there is 18" of water in the basement I'd like to think they will be a little flexible

Yes, sometimes listing agents don't know that much more about the property simply because that info is not given or they are unable to have access to obtain info. As long as you understand and are comfortable with the risks and are patient with construction/rehab, you should be fine. Sometimes, risks could involve title and liens/legal disputes that come out after close of escrow. Very much so caveat emptor.

Bottom line-
If you don't do anything,(like writing up an offer), you won't get anything. The bank or AMC doesn't know you're out there. Good Luck!

Good luck..I just put an offer on one for a client and it was just accepted today..there is alot more to it (paperwork) than just a owner thats selling...but hopefully it works out for you and you can negotiate something..good luck on this..keep us posted!

Angie

Well, called the listing broker to follow-up this afternoon. To my suprise, the brokers assistant gives the call to the broker (suprised as I have had very little contact with the broker as his assistant seems to handle everything). Anyway, the broker proceeds to tell me that nothing has been done with the offer as they are now requesting all offers be through reosource.com It would have been nice to know this prior to submitting the offer...heck would have been great to have been told this on Thursday when I contacted them to make sure the offer was received. They seemed to leave this important piece of information out until today. It just makes me wonder how some people get their license or keep it for that matter. In any event, after phone tag and speaking with my broker I will stop by the office and take care of this tomorrow. Who knows what will happen next. And I thought dealing with building clients was a headache*L*

Tom

Too bad they are so unprofessional. Tell them to take a swim in the basement! lol. Anyway, Good luck, and let us know what happens.

Oh believe me I would love to tell them that Unfortunately my brother really likes the location and as a typical buyer would has become too emotionally involved. Now for the waiting... :rolleyes:

Well we received the counter. They shaved a whole $1000 off the list price. Really generous people Still waiting to hear back from my buyer but I am 99% sure they will buy anyway.....

don't let your buyer's be unhappy. These fix it properties are abundant and the bank probably won't work with you anymore than this counter. They usually don't do multiple counters. find something with less of a hassle.

I would love to Vegas but this is my brother and he tends to be a little thick. He likes the location and wants the house but it would be beneficial to get them to pump it out first.


Update: First off, please tell me every deal doesn't suck as bad as this one. This broker is killing me. Just received an email, after talking to him about the water problem, and he told me to submit an offer subject to the seller installing a sump pump. We did say seller to pump out prior to inspection in the PA. I don't think it's rocket science here to figure out this is what needs to be done.........Perhaps I am expecting too much...

And it gets better. I got another email stating that he didn't look at the PA that was faxed over Not too mention, he asked if I had a trash pump being that I am a builder. So I guess he figures I should pump it out for my buyer :rolleyes:

I would really like to know where in the United States that is true!!!!

Nationally foreclosures are down more than 27%, most AMC's report record low inventories and most MLS's indicate a strong Sellers Market that makes any investment property more difficult to find. Knowing several very active investors in the Las Vegas area, they are assuring me their is not only not an abundance but a significant shortage resulting in decreasing ROI potential.... so if you know of an abundant supply... let me know!

I've read a couple of articles recently regarding certain states and increasing foreclosure rates. I'd have to find them to verify this, but I seem to remember Texas and Ohio being listed as states with increasing foreclosures (due to predatory lending, loss of maunfacturing jobs, etc.). With the number of buyers interested in RE investing increasing, I can believe that the ROI potential is decreasing, but I would think that some areas continue to have a decent supply of REO properties.

One only has to drive through Youngstown, Ohio to find a number of "fix-it" properties.

Unfortunately, we're also seeing this type of activity beginning in Akron and Canton, mostly due to the manufacturing jobs leaving...

Canal Winchester and Pickerington Ohio are filled with them..almost every house in the 130,000's is bank owned..they trash them though and that's the sad part..some are beyond repair to most buyers...

Angie

It sounds like it might be time to walk; potentially too much liability and there may be more problems than what is discovered.