How to sell reo properties
Tips For Getting Bank Owned Properties Cheap
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if baked own property or what's commonly
referred to as an REO is a property that
has been foreclosed on where no one
bought the property at the foreclosure
auction and the bank took back the
property
well banks are not in the business of
owning real estate they're in the
business of loaning money so when a bank
gets back a foreclosed property they
market it for sale with a local real
estate agent and they sell it and over
the years having flipped hundreds and
probably thousands of properties I would
say bank owned properties have probably
been my best source of deals as a real
estate investor if you're not actively
going after REO s then you're missing
out on a huge source of deals on today's
video I'm gonna break it down and I'm
gonna show you everything you need to
know specifically 10 tips for getting
bank owned properties for cheap coming
up
hi it's Jerry Nora and the nation's
leading expert on flipping houses even
if that is self proclaimed and first and
foremost a lot of people are confused
about what a bank-owned property or REO
and they wonder if an REO is different
or the same as a foreclosure so let's
make sure that you're clear what an REO
is and let's quickly review the
foreclosure timeline and sequence of
events when a homeowner defaults on
their loan with the bank which usually
means they stop making their payment the
bank begins legal proceedings to
foreclose on the home since real estate
is governed state by state the rules and
process will vary by state but the basic
process is the same there are notices
and there's certain filings that have to
take place this phase in the timeline is
known as pre foreclosure and can take a
few months to a year sometimes even
longer as an investor this is an
opportunity since the homeowner is
likely motivated to sell to prevent a
foreclosure well if the homeowner
doesn't catch up on the back payments or
sell the property during the pre
foreclosure stage the day of reckoning
will come when the property is actually
foreclosed on at the county courthouse
known as the foreclosure auction which
is phase two of a foreclosure this is
another opportunity for you as an
investor to buy the property the opening
bid is usually what is owed to the bank
if no one buys it the bank gets the
property back now in some states the
owner has Redemption rights which is
more time to redeem or make-whole the
bank but at some point the bank gets
back the property and that takes us to
our third phase of a foreclosure which
is when the bank owns it
technically it's no longer foreclosure
because the bank owns it now and this is
what we call an REO so when people
loosely say foreclosure it could be
either pre foreclosure the actual
foreclosure at the auction or REO on
this video we're gonna focus the
remainder of this video on phase 3 the
REO so let's do a deep dive and cover
everything you need to know about
dominating REO s now I have ten tips
that I want to share with you but first
if we've never met I'm Gerry Norton and
this channel is dedicated to helping you
make more money right now in real estate
not later in ten or twenty years or even
three to five years but right now so
that you can achieve true financial
freedom and live your dream life
consider subscribing to my channel and
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stay to the end of this video because I
have a free software that finds
unrefreshed properties including Aereo's
in any
code in a matter of seconds I'll tell
you about how to get it for free so
stick around when the bank takes back a
property the first thing that happens is
the REO is assigned to what's called an
asset manager the asset managers job is
to liquidate the property now this next
part is extremely important in most
cases the asset manager has a
contractual agreement with a local
licensed real estate agent who will get
all of the bank sarios in that specific
area or region so for example Bank of
America have a contract with an agent in
Atlanta Georgia
so that agent will get all of the REO
listings for Bank of America in Atlanta
now it may be for specify time and there
may be a handful of agents that split
the listings and some agents may
represent big banks where they get a lot
of listings and some agents may
represent small banks where they only
get one or two REO listings per year but
here's my point the bank hires a real
estate agent to sell the REO and in any
given market there are only a handful of
agents who get the REO listings I hope
you see where I'm going with this
so tip number one is to find out who the
local REO agents are in your market once
an agent is given an REO they listed for
sale on the Multiple Listing Service or
MLS which is private just between agents
but after the property goes on the MLS
other sites such as Zillow Trulia
realtor.com and redfin make it public
information on their websites which
means you can go back on sold
transactions and active listings and do
your research and find out who the REO
listing agents are in your market tip
number two is they build a relationship
with the REO agents in your market the
way to do that is to follow my double
dip technique this is where you go
directly to the listing agent and you
make offers directly to them on their
listings without a buyer's agent
representing you you offer to let them
represent you by doing that they get
both sides of the Commission and will be
highly motivated to work with you on
their REO listings this is a game
changer and so vitally important so make
sure you understand my double dip
technique watch this video to learn a
detailed explanation of my double dip
technique once an REO agent has a
relationship with you they will call you
with their new listings and you'll have
a competitive advantage I once flipped
an REO property that was brought to me
by an agent who I had done several deals
with previously he called me and he told
me about this property above
it was even listed it was in a nice
neighborhood but the kitchen was ripped
out so the bank was looking for a cash
offer since a homeowner wouldn't be able
to get financing without a kitchen I was
able to secure the deal before anyone
else even had a chance I fixed it up and
flipped it and I made a seventy-five
thousand dollar profit that's how
important the relationship is tip number
three is to make the offer regardless of
asking price I follow this rule with any
type of seller but what's so nice about
REO is is it's all business there is no
emotion there is no drama
there is no seller crying at the kitchen
table none of that it's so refreshing
they either accept your offer or they
don't and no one is offended at your
offer so just make the offer tip number
four is to focus your offer on the
closing date keep in mind an REO causes
some real problems for the bank
it's a non-performing asset on their
books and depending on their month end
or their year-end reporting the bank can
become extremely motivated to sell the
property and hitting their deadline is
very important to them it's all about
the timing with oreos oftentimes closing
by a certain date is more important than
the price I've had several times where
the bank accepted my low offer as long
as I agreed to close by a certain date
usually the end of the month one time I
had an REO agent call me on one of their
listings that have been active for over
a year
it was obviously overpriced and the bank
was not motivated to sell it well the
agent called me and gave me some insider
information
he said his asset manager wants the
property gone by the end of the month no
matter what so I made a lowball offer
that was half of the asking price and
they accepted it tip number five is to
justify your price
in my experience banks are very
level-headed the asking price was
determined by doing what's called a
broker price opinion or BPO to determine
the Aza's value it's basically an
appraisal but if you put together a
compelling story about why the price
should be lower often they'll consider
it I've had the bank come back and asked
me to show them three quotes for the
repair work and then accept my offer tip
number six is banks hate contingencies
they hate financing contingencies which
is why they'll often take a cash offer
over a financing offer even if it's a
lower price always make your offers on
REO as a cash buyer they also hate
inspection contingencies they want to be
certain that you're going to perform and
not
play games what I'll often do is make my
initial offer with a 10-day inspection
contingency and then during the
countering and negotiating I'll offer to
remove it if the bank will come down to
my price works like magic tip number
seven for the same reason I just
mentioned banks want to know you're
serious and they expect a big earnest
money deposit this isn't like a private
seller where you can do a $10 earnest
money you may be able to get away with a
thousand dollar earnest money but
oftentimes banks want to see 10% which
can be pretty steep again I'll come in
with a low earnest money to start like a
thousand dollars and then during
negotiations I'll offer a bigger earnest
money like five thousand dollars if
they'll come down to my price remember
closing on time is often more important
than price so use the other terms in
your contract as negotiation tools when
you remove contingencies and you
increase your earnest money the bank
feels more confident in your ability to
perform so tip number eight is to always
perform if you don't and you back out of
your contract you'll likely burn a
bridge with the REO listing agent so
before you lock up a deal make sure
you're confident in your numbers don't
forget with REO agents it's not just the
deal in hand but future business -
that's at stake
I once wholesale the deal for a $5,000
loss just to save face with my REO agent
because I wanted that agent to always
count on me to perform and continue to
bring me deals tip number nine is you
can wholesale REO s it's no different
than wholesaling private seller deals
but keep in mind all Ari o--'s have a no
assignment clause which prevents you
from doing a single closing and forces
you to do a double closing which is not
ideal
now I developed a work around using a
designated LLC it's a really cool trick
to still do a single closing so watch
this video to learn how
tip number ten is if you're wholesaling
use my triple dip technique to find a
cash buyer once you have the contract
called back the REO listing agent and
offer to pay them an additional
Commission of say two thousand dollars
if they call all of the other investors
who made offers on that property and
offered a wholesale them the deal I
found that I can wholesale about 25% of
my REO deals by doing that one technique
now I did a video explaining the triple
dip technique in more detail so be sure
it'll watch that now I'm glad you stayed
to the end of this video because I
developed a software tool that scans all
of the on market properties in any zip
code and it serves up a list of under
pressure
properties including our EOS that lets
you know the best deals to go after now
I'll give you access to the software for
free just click the link in the
description if you learn something in
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the next video
