REO property specialist

[Shamatso]

Anyone of you have negotiated with lenders about their REO properties?  Please submit your experiences and comments here.  Is there a form they would like for you to submit as a serious proposal?  Would they carry short term mortorium on the existing loan until the propety is fixed and sold?  If yes, what is the most month?  Is it possible to talk to the decision makers when negotiating?  Deeper discounts for all cash transaction?

Thank you,

James

[NoMoneyDown]

Are you referring to pre-foreclosures or actual REO's (post foreclosures/auctions)?

[Shamatso]

It doesn't matter whether it's REO or pre-foreclosure properties.  I just don't want to waste time doing things over, especially the long dragged out mortgage or purchase agreements that the lender will not accept because of the verbage or non-standard or different state so on and so on...

I always felt that, talking about it doesn't mean a thing with anyone but action means everything; especially in writing.  Someone here must have done REO before?  I know there are "short sale"pre-foreclosure offering but how do you propose to REO property bank owners?

James   ???

[cherdwelth]

From what I've read and hear of others - they submit a contract over and over until they get the property or it is sold to someone else. In other words, make a pest out of yourself! LOL  

[Shamatso]

I really don't know if being a pest is the answer... I don't want them to mark me as a pest.  I know person should be aggressive in making an offer to lenders but I don't want them to see my name each time to use the word "pest" in their commment to internal communications.

There must be another way... very productive way that works for some of the very savvey investors but I am sure that, they would rather keep that under the hat since, it would only create competition.  And if those savvey investors are reading this, I do understand that, good process could be tainted by people who practice without regards or respect to others.  I am hoping to hear from you to discuss the matter in professional collaboration.

Thank you

[NoMoneyDown]

It doesn't matter whether it's REO or pre-foreclosure properties.

It makes a big difference.  For example, working pre-foreclosures (i.e., short sales), you are dealing directly with the bank.  You could also be dealing with multiple lenders.  The property hasn't gone through the ringer, so there is a lot more negotiating room.  REO's, OTOH, are dealt through a listing agent, who presents the offers to the bank.  Fees, etc., from the foreclosure and auction are usually added to the price.  You could very well be "dealing" with a whole different department (through the listing agent, of course).  The "secret" is to get these properties before they become REO's.

FWIW, I've dealt with many banks after the property has been through the ringer (i.e., REO's) and they have all been pretty stiff when it comes to any negotiation in price.

[cherdwelth]

Maybe pest was a wrong choice. I was joking sort of. You can make a bid every month until its sold to your or someone else. Its done all the time. And I would submit the exact same bid. Squeeky wheel gets attention!

[Shamatso]

                          foreclosure and auction are usually added to the price.

Could you please expand what are included in the cost associated with pre-foreclosure process?

I am sure you are right in saying that, there is difference between REO and pre-foreclosures; however, since banks are not in managing real estate assets, they would want to unload the inventory in either stage.  The moment mortgage went into default, banks are losing money and I would think, banks would feel the pain when the property goes into REO.  When time is money, you already have someone (real estate agent) representing the property that will disclose most of the information right over the phone.  Who knows the market better?  Lender or Real Estate agents?  OK, blah, blah .. blah

[Shamatso]

Oh, one more thing ... In pre-foreclosure, you have to get the present owners to agree on short sale or they will let it go to the end and that means negative cash again to banks.  Another thing to consider in that senario, different states have different length of redemption period.  In Minnesota, it could take up to one year and that is much too painful for any lenders to recover even 80-90% of their money.

[NoMoneyDown]

since banks are not in managing real estate assets, they would want to unload the inventory in either stage.

Common sense would say "yes", but banks aren't in the common sense industry, either.  

In pre-foreclosure, you have to get the present owners to agree on short sale

Definately.  In preforeclosures, banks won't deal with anyone except those authorized to do so.

different states have different length of redemption period.

Very true.  I believe in Texas it's 21 days.

[Shamatso]

NoMoneyDown:  in your prior statement, you stated "foreclosure and auction are usually added to the price."

Could you please expand what are included in the cost associated with pre-foreclosure process?

[NoMoneyDown]

NoMoneyDown:  in your prior statement, you stated "foreclosure and auction are usually added to the price."

Could you please expand what are included in the cost associated with pre-foreclosure process?

Not sure why you bundled these two statements together.  I was talking about post-foreclosures in the first statement, and your talking about pre-foreclosures in the second.  If you are asking specifically about costs associated with pre-foreclosures, are you talking about your costs or the banks costs?  I haven't dealt with short sales, so I'm not 100% sure of the banks costs in doing them.  I believe they still go after the owner at tax time, but I don't know the specifics.  Others with more short sale knowledge would be better to answer this particular question for you.

[cherdwelth]

If anyone is intersted in a very good book about short sales, get:

Success In Short Sales by Loni Parmelly

I have no monetary interest in the book except my purchasing it. I've read it and it explains shorts sales very well ... start to finish. It is written with realtors in mind, but you don't need to be one to learn from the book. It covers the beginning of the process to the closing.

During any BANK sale - pre, post, short - the bank is going to try to add in every cost they can scrounge up to add to the sale price or negotiated price.

Also, if you don't know this, the banks (Investors) are many times covered by Mortgage Insurance. Many people think this money they pay each month on their mortgage is for them - its not, its for the Investor. The Investor (bank) gets insurance on the loan just in case it is defaulted upon. The MI Company will give the Investor in a default appox. 25% of the mortgage balance as a claim. So factor this into any deal as well.  Find out if there is MI on the loan.  Just some info you might not know.

Do reading on any RE subject ... it really can help. Forums are great, but lots of the info (including mine) is written fast and can sometimes be confusing. Good luck.

[Shamatso]

Cherdwelth:

I am wondering what you've stated in your last post, did you get that information in the Loni Parmelly's book?  If not, were did you get the following information?

Also, if you don't know this, the banks (Investors) are many times covered by Mortgage Insurance. Many people think this money they pay each month on their mortgage is for them - its not, its for the Investor. The Investor (bank) gets insurance on the loan just in case it is defaulted upon. The MI Company will give the Investor in a default appox. 25% of the mortgage balance as a claim. So factor this into any deal as well.  Find out if there is MI on the loan.  Just some info you might not know.

James

[cherdwelth]

I knew about MI companies and how they insured Investors (mortgage holders) because when I was younger I had to pay MI payment on top of my mortgage payment. I asked them what it was and they explained that it insured the Investor ... not me.

I did not know that this money was an insurance policy in case I defaulted and that the Investor would get money back if I defaulted.

Not all mortgages are insured by MI companies.

I read about this further in the short sales book I mentioned. HTH