5 Ways to Snag REO Properties Quickly
Looking for profitable investment deals? REO properties have become more popular candidates for fix-and-flip opportunities. Realtor.com defines REO deals as Real Estate-owned properties owned by a lender which fail to sell at foreclosure auctions. Over the years, their desirability soared right up with foreclosure and probate properties. You can find phenomenal homes at extremely discounted prices by searching REO listings.
However, since they are heavily discounted, we guarantee some healthy competition exists for these properties. Do Hard Money is here to give you a leg up over the competition so you can snag these properties first. Here are five things you can do to give REO agents an offer they can’t refuse:
1. Examine the Property History and Comparables
Further narrow your offer to the perfect price by researching the price history. By examining the property history and comparables, you find what the property is really worth and how to make your offer the most competitive.
In real estate, a property is only worth what someone is willing to pay for it. First, take a look at the last three months of comparables (recently-sold similar homes in the neighborhood). Then, once you obtain these selling prices, have your agent get you the lender’s purchase price on the Trustee’s Deed or Sheriff’s Deed. Finally, compare that price to the price which the lender lists. Assuming the property is under-priced, the lender will accept an offer that is made between the original mortgage balance and the foreclosure sales price. Narrowing down a competitive property purchase price gives you a significant edge to steal the property out from under the noses of your competition.
2. Submit a Proof of Funds Letter
A Proof of Funds Letter shows the lender you mean business and can do business with them right away. These letters show you already have funding set aside for this deal. Therefore, you speed up and simplify the loan process. Lenders definitely want to work with investors who are already pre-qualified or approved for a loan.
If you have a property in mind, quick! Click on the yellow ‘GET PRE-QUALIFIED’ box on the right and fill in the fields. Get started today and claim that golden property before anyone else gets hold of it.
3. Check the Listing Agent’s Sales History
This method kills two birds with one stone. First of all, the majority of REO agents usually work for one or two banks/lenders. Some of them list REOs exclusively. This gives you an incredible pool of eligible properties, significantly reducing your search time. Second, these agents deal in volume and usually apply the same pricing principles to all of their REO listings.
Look up the listing agent in the MLS and check out their last 3-6 months of listings. You’ll see their history of list-price to sales-price ratios. If you see a trend in those listings, such as 3% over list price, further refine your offer to 4%, making it more competitive.
4. Speed up the Inspections
Like the Proof of Funds Letters, this method speaks volumes regarding your borrowing credibility. The more quickly you can get things done, the more lenders will want to work with you.
Shortening the inspection process doesn’t mean cutting corners. Perform a thorough inspection on the property, but do so efficiently and productively. Far too many investors drop the ball on property inspections and evaluations. As a result, they take weeks and/or months to accomplish them or abandon them altogether. Therefore, if you inspect a property and quickly move on to the next stage of the process, the lender knows to take you seriously. Thus, you receive a better chance of obtaining the property.
5. Don’t Demand Concessions
Lenders and banks definitely don’t enjoy working with someone who makes excuses or demands little extras. Remember, the lender is already losing money on these properties by selling them for far less than they’re owed. Therefore, asking the lender to pay for inspections or repairs generally translates as you trying to take advantage. As a result, they won’t take you seriously as an investor.
Occasionally, lenders pay for some repairs, but these requests rely heavily on good timing. This is where the art of negotiation plays a major part. Lenders won’t agree to pay for extras at the initial offer stage. However, if you find major problems during an inspection, you should renegotiate the purchase price.
Did you know…Do Hard Money provides absolutely everything you need for successful real estate investing? In addition to essential tools and resources, DHM also gives each client access to a team of REI experts to help walk them through the fix-and-flip process. Our team wants to help you save thousands of dollars on each deal and drastically increase your profit margin.
Click on this link to schedule a time to chat with one of our investment associates. To speak with a real estate associate right away, call us at 801-948-9774. Our REI professionals are standing by and ready to help you open the door to financial freedom. Schedule your appointment today!