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REO and Short Sale Buyers. Steve and Kat Sanders 951-847-7353 [email protected]. REO and Short Sale Buyers. What they are How to find them Are they a “good deal”? What is a good offer? Documentation Dealing with Buyers. Short Sale vs REO. - PowerPoint PPT Presentation
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REO and Short Sale Buyers
•What they are
•How to find them
•Are they a “good deal”?
•What is a good offer?
•Documentation
•Dealing with Buyers
Short Sale vs REO
A short sale is still owned by A short sale is still owned by a private party borrower a private party borrower and the bank still has a and the bank still has a lien/loan.lien/loan.
Foreclosure is the process Foreclosure is the process by which the lender takes by which the lender takes ownership of the property ownership of the property (NOD to Notice of Sale – 121 (NOD to Notice of Sale – 121 days)days)
An REO is a property that An REO is a property that has been through the has been through the foreclosure process and is foreclosure process and is now owned by the lender now owned by the lender under a trustee’s deed and under a trustee’s deed and the borrower is a tenant and the borrower is a tenant and SOL.SOL.
Representing Buyers
REO’s and Short Sales attract REO’s and Short Sales attract buyers looking for a “deal”buyers looking for a “deal”
What does a “deal” look like What does a “deal” look like to the buyer?to the buyer? How much do they need to How much do they need to
put down?put down? How much cash do they How much cash do they
have for repairs?have for repairs? What can they qualify for?What can they qualify for? Can your buyer do section Can your buyer do section
1?1? Can your buyer afford to do Can your buyer afford to do
the repairs?the repairs?
Short Sale
Loans plus closing costs Loans plus closing costs are higher than valueare higher than value
Some lender somewhere Some lender somewhere is taking a loss and they is taking a loss and they don’t like that.don’t like that.
How much of a loss are How much of a loss are they willing to take?they willing to take?
Short Sale
The list price may bear no The list price may bear no relation to the real pricerelation to the real price
Bait and Switch agentsBait and Switch agents Is it a lender confirmed Is it a lender confirmed
short sale?short sale? Mother-in-law syndrome Mother-in-law syndrome
(lender)(lender) How long are you willing to How long are you willing to
wait for an answer?wait for an answer? Is it a good deal?Is it a good deal?
Short Sale - Offer
How much?How much? How short?How short?
Is there a 2Is there a 2ndnd?? Up to 10% short may be Up to 10% short may be
acceptable.acceptable. A wiped 2nd may be A wiped 2nd may be
acceptable, but is acceptable, but is unlikelyunlikely
Don’t waste your time or Don’t waste your time or your client’s. It’s all you your client’s. It’s all you have.have.
There are other “deals” There are other “deals” out there.out there.
Making an Offer
RPARPA PAAPAA SSASSA Patience – 4-6 Patience – 4-6
weeksweeks The lender doesn’t The lender doesn’t
own it yet.own it yet.
How Do I find REO’s in the MLS?
Legal section of the MLS – Legal section of the MLS – run a search for REO (2/3)run a search for REO (2/3)
Run a word search in public Run a word search in public remarks (REO, Real Estate remarks (REO, Real Estate Owned, Corporate, Repo)Owned, Corporate, Repo)
Run a word search in private Run a word search in private remarks (REO, Real Estate remarks (REO, Real Estate Owned, Corporate, Repo)Owned, Corporate, Repo)
Representing Buyers-REO
Is an REO the best deal?Is an REO the best deal? When was the last time the When was the last time the
Buyer used their toolbox?Buyer used their toolbox? Which is better, cash or Which is better, cash or
credit?credit? Repairs are not generally Repairs are not generally
financeablefinanceable Upgrades in a resale are Upgrades in a resale are
included in the purchase included in the purchase priceprice
Section 1Section 1 Sellers fix very little (if Sellers fix very little (if
anything at all)anything at all)
Condition of the Property Not all REO’s are in bad Not all REO’s are in bad
shapeshape Not all REO’s are in good Not all REO’s are in good
shapeshape People forced from their People forced from their
homes are often angry. Ask homes are often angry. Ask the listing agent if the the listing agent if the former occupants have former occupants have been an issue. While the been an issue. While the lender/owner does not have lender/owner does not have to disclose, the agent does.to disclose, the agent does.
You owe it to your client to You owe it to your client to ask. Only disclose what you ask. Only disclose what you know, in writing, by saying, know, in writing, by saying, ”The listing agent indicates ”The listing agent indicates that the former occupant that the former occupant _______”. Fill in the blank _______”. Fill in the blank and document when and and document when and what time you spoke to the what time you spoke to the listing agent.listing agent.
The Offer Process
The list price has been The list price has been determined by an appraiser determined by an appraiser or by an agent (BPO) and is or by an agent (BPO) and is generally already at the generally already at the lower end of the marketlower end of the market
The REO committee or note The REO committee or note investor has approved a investor has approved a price. Offers within that price. Offers within that price will be readily price will be readily accepted and processedaccepted and processed
Offers below pre-approved Offers below pre-approved prices may take longer for prices may take longer for acceptance and are likely to acceptance and are likely to be rejected, particularly be rejected, particularly those in the first 30 daysthose in the first 30 days
Making an REO Offer In a normal market you In a normal market you
cannot dealcannot deal In a buyer’s market it’s “Let’s In a buyer’s market it’s “Let’s
Make a Deal”Make a Deal” 10% below list and you are in 10% below list and you are in
the game, more is very iffythe game, more is very iffy Look for properties that have Look for properties that have
just been reduced.just been reduced. Ask for escrow and title, but Ask for escrow and title, but
you probably won’t get themyou probably won’t get them Ask for closing costs not to Ask for closing costs not to
exceed $................exceed $................ Section I is a maybe. Other Section I is a maybe. Other
repairs not likely, but it repairs not likely, but it doesn’t hurt to ask.doesn’t hurt to ask.
Making an Offer READ the office comments READ the office comments
carefully in the MLScarefully in the MLS Qualify the buyer through Qualify the buyer through
the REO’s lenderthe REO’s lender No matter what, you will be No matter what, you will be
counteredcountered Title and EscrowTitle and Escrow There will be a point at which There will be a point at which
the lender will not dealthe lender will not deal Discount the price for what Discount the price for what
needs to be done and needs to be done and explain it.explain it.
Normal response time can be Normal response time can be a day or two, but many a day or two, but many lenders will take a week to lenders will take a week to 10 days10 days
The Lender’s Addendum Some requirements from out Some requirements from out
of state lenders are illegal in of state lenders are illegal in California (SDWH)California (SDWH)
Repairs almost always Repairs almost always excludedexcluded
Hear, see and speak no evil. Hear, see and speak no evil. No NHD, no TDS, no SBSA, No NHD, no TDS, no SBSA, etc.etc.
I know nothing, As-Is, I know nothing, As-Is, Where-Is.Where-Is.
It doesn’t matter. If the It doesn’t matter. If the client really, really, really client really, really, really wants the property and it is wants the property and it is a good enough deal, shut up a good enough deal, shut up and sign it, knowing the and sign it, knowing the buyer will have to pay for buyer will have to pay for everything anyway.everything anyway.
SO, YOU WANT TO BUY AN REO, HUH?
Questions
