7 Tactics You Can Use Today
To Get California Bank-Owned Properties
At the moment, banks nationwide are guesstimated to own around 1,000,000 SFRs (Single Family Residence). Banking requirements mandate them to be offered for sale, as the banks are not permitted to benefit from them or possess them long-term. Today, the banks are no longer marketing these houses with Realtors. If the present “shadow inventory” were to get posted on the MLS (Multiple Listing Service), the pressures of over-supply could direct Real Estate values substantially back down once more. So, what are the banks carrying out to rid themselves of their REOs? They are re-selling them to individuals at surprisingly deep reduced rates!
Whether or not you are a skilled Real Estate investor, a rookie real estate investor, or just someone searching for your own home, you can successfully obtain property from a bank!
“How?” you ask.
By using seven secret techniques to set up an offer that will get the Asset Manager’s interest and warrant significant consideration.
How would you like to acquire a residential property from 40% -60% off of ARV? (After Repaired Value) Quite possibly you are likely a person who wants to possess cash flowing rental dwellings, yet you are situated in an area where the rents won’t meet the debt service, taxes, insurance, and preservation, and keep some for PMI (Positive Monthly Income).
Possibly you are a rehabber, and you really want a residential property to “Fix and Flip”. Possibly you are a newbie property buyer who desires the a lot of bang for your buck. If you are just searching for the very best property value for your hard earned cash.
If the “deal” is more critical to you than the property, obtaining a REO (Real Estate Owned) from a bank may be just perfect for you!
1. Pursuit Weaker Banking Institutions Because They Are More Motivated
Financial institutions are not all the same! In today’s overall economy, some banks are in healthy financial condition, and others are in significant difficulty! Does it make good sense that a lender that is in financial difficulty will, before all else, be more motivated to get rid of their REOs and, second, want to resell them for less money? Here is a straightforward and easy technique to learn which banks are hurting!
A lot like us, banks carry a credit score.
It is a strongly safeguarded secret that is never revealed to the public.
Are you ready?
It is known as the CAMELS score. And, just like our credit score, one part of CAMELS has the most significant consequence.
The “A” in CAMELS represents “Asset Quality”.
Bank assets are their loans. How great are the loans they have been creating? We can attain a simple picture of a bank’s financial health by figuring out their default ratio. Go to www.FDIC.gov.
2. To Be Taken Seriously, Posture Yourself as an Expert
Here’s the deal:
The Asset Manager does not have precious time to instruct you to compose an offer appropriately or hold your hand during the deal. They prefer to work with seasoned Real Estate Investors who currently understand what they are doing.
One of the primary complications that consumers have working with banks is getting the Asset Managers to take them seriously and granting their offers consideration.
So now, you are going to find out how to present them specifically what they desire!
Whether or not you have never gotten a house from a bank previously, with a tiny bit of help, you can make it look like you are very seasoned and experienced. When you converse with them, position yourself a real estate investor.
Tip: Do not share with them you are going to reside in the home!
Key Point: Go to www.vistaprint.com and have some reasonably priced business cards to send them.
3. Be Willing to Acquire a Property As IS
Here is a situation that may seem bad, but works in our favor:
We should agree to acquire the residential property AS IS. But, here’s the twist, we don’t get to view the inside of the property before we make our offer! Numerous REO homes are totally boarded up and secured to shut out illegal tenants and decrease liability problems. At the very least, the doors will be secured, and all the windows boarded up.
What does this mean?
You can’t observe inside. And there is not anyone to unlock the house for you until you have an approved offer.
You’ll have to generate our offer sight unseen! Now, this is why generating the offer before seeing the property is to our advantage…
The bank will have acquired a BPO (brokers price opinion) as to present market value. The broker can not access the appearance of the inside, so they have to presume that the whole thing is free of any issues, and that no repair services are required.
But…we know better, and the Asset Manager knows better too!
We, on the other hand, have to presume that everything that is inside is gone and determine our MAO (maximum allowable offer) with the prices of a comprehensive interior rebuild. The Asset Manager knows this and is anticipating offers of 40% -60% of the BPO!
Because the broker cannot access the appearance of the inside, so they have to presume that the whole thing is okay, and no repair services are required.
Of course, we know better, and so does the Asset Manager!
We, however, have to presume that everything that is inside is gone and determine our MAO (maximum allowable offer) with the prices of a comprehensive interior rebuild.
The Asset Manager knows this and is anticipating offers of 40% -60% of the BPO!
Key Tip: We do NOT have to invest in the home sight unseen, we merely make our offer sight unseen.
4. Here’s The Only Contingency You Should Use In An Offer
The Asset Manager will not entertain any proposal that has any subject to/contingencies aside from the inspection clause. The majority of the states provide a 14-day inspection time period making it easy for you to walk away from the deal for practically any reason.
We want to incorporate in our offer, a 10-day inspection time period. This informs the Asset Manager of our determination to participate in the transaction. We want them to recognize that we are qualified and prepared to purchase and will act rapidly and efficiently, not throwing away a minute of their time.
When our offer is approved, the Asset Manager will provide an individual to open the property so that we can obtain our property inspector to perform a comprehensive inspection. In case we spot any unanticipated matters, we can walk away with no problem, or revert to the table and discuss a reduced price.
Key Tip: We are NOT bound to acquire the home until after the inspection duration has lapsed.
5. Always Submit an All Cash Offer
Our offer will need to be “All Cash at Closing”. Do not ask the bank to bankroll their own REO! Do not make your proposal contingent on some other bank or lender funding the property. You have to have your money available and be able to close immediately. This is one of the main reasons banks no longer list their REOs with Realtors.
6. Increase Attractiveness of Your Offer: Use a Fast Closing
Another technique to demonstrate the Asset Manager our seriousness and determination to the deal will be to agree to an extremely small closing timeframe.
We would like to close just within 14 days of their accepting of our offer. Once more, we want them to comprehend that we are all set to purchase and will respond quickly and efficiently. It is very critical that we have our funding ready and easily accessible because we are going to make a sizable earnest money deposit.
7. Have a Large Earnest Money Stake Included in Your Offer
The remaining technique we are going demonstrate to the Asset Manager our seriousness and commitment to the purchase is to make a very substantial earnest money deposit. $10,000 minimum or 10% of the offer, whatever is more.
Key Tip: When you are mailing in your package, do not provide an earnest money check. Make the earnest money due to be deposited within 24 hours of the approval of the offer.
The banks, by law, need to deposit the check into their trust account, even if they deny your offer, and it can take you 7-10 to get your money back!
Even with limited or no prior background, by adopting these straightforward steps, you can now invest in significantly discounted Real Estate in almost every market in California!