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BUYING AND SELLING REOs- Bank Owned Properties

BUYING AND SELLING REOs- Bank Owned Properties. Week 2 REO Boot Camp with Nancy Geils. Take Lots of Notes!. I have created a “back office” where you can access all the replays, documents, bonuses and everything I promised you in the Bootcamp ! **Website: www.nancygeils.com/membership

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BUYING AND SELLING REOs- Bank Owned Properties

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  1. BUYING AND SELLING REOs-Bank Owned Properties Week 2 REO Boot Camp with Nancy Geils

  2. Take Lots of Notes! I have created a “back office” where you can access all the replays, documents, bonuses and everything I promised you in the Bootcamp! **Website: www.nancygeils.com/membership User name: REO Password: bootcamp

  3. What We Will Cover • Review Last Week • Building Your “Cash Buyers” List • www.craigslist.org • Ads that work: • Handyman Special • Worth 100K, Will Sell For $45K • Call For details 203-555-1212 (This one will not last!)

  4. NY Times NEW YORK TIMES- The bleakest year in the foreclosure crisis has only just begun. Lenders are poised to take back more homes this year than any other since the U.S. housing meltdown began in 2006. About 5 million borrowers are at least two months behind on their mortgages right now. “2011 is going to be the peak…” Predictions are that there will be 1.2 million homes repossessed this year. These devastating statistics could make you very wealthy if you get in on this right now!”

  5. Realty Trac Reports • Record 1 million REOs in 2010, but defaults drop 20 percent. • Lenders foreclosed on more than 1 million U.S. properties in 2010, a record number since Realty Trac began tracking foreclosure activity in 2005. • Meanwhile default notices dropped 20 percent from 2009 to 2010, indicating that this foreclosure cycle could peak in 2011 as lenders finally are able to clear the backlog of distressed loans built up over the past five years- although the risks of unemployment, negative equity and resetting ARM loans could trigger further foreclosure aftershocks.

  6. Top 10 States For Foreclosures • California: 173, 175 • Florida: 122, 912 • Michigan: 72, 180 • Arizona: 70, 288 • Texas: 61, 848 • Georgia: 53, 329 • Illinois: 49, 723 • Ohio: 40, 911 • Nevada: 36, 120 • North Carolina: 22, 953

  7. REOs Let’s talk about the Steps “ How to Wholesale Bank Owned Properties” 1. Submit offers for REOs with proof of funds letters 2. Contract to Buy the Property with the Bank 3. You have your Buyer’s List already created and you send an email and contact each Rehab Buyer. 3. Get property under contract with you new Rehab Buyer 4. Submit papers to your lawyer and to Ivisionary for one day funding (unless your using your own money to close the deal, then you don’t need Ivisionary)

  8. Why Wholesaling REOs? • No Risk • Quick Cash in usually 2 weeks • Market Trends are not an issue • No need for capital or credit checks

  9. REOs • In simplest terms, Title has come back to the lender or bank- becomes bank owned. Lo liens, no encumbrances to mess up the deal! • These are some of the best deals now!

  10. Find the Property Deals to Wholesale • If you are going to wholesale, the name of the game is “buy the house at a very low price, and then sell it to another investor for a low price” so that it is a win-win for everyone. • Everyone has to make money! Win-win situation. • BUY LOW, SELL LOW! Don’t Get Greedy! Rinse and Repeat!

  11. Who are the People in the REO Wholesale Deal • Bank- Seller • You- the Wholesaler • Real Estate Investor- Investor Cash Buyer • Your Power Team

  12. Building Your Buyer’s List • Don’t wait until you have a property under contract, start building NOW, and don’t stop adding names. Remember these investors are potential repeat customers so your reputations is imperative. • If you wouldn’t buy it yourself, don’t try and wholesale it!

  13. Some Questions to Ask your Investor Cash Buyer? • How soon after seeing the property can you close? • I will require a $1000 earnest money deposit if you approve of the property and want to sign the contract, is that ok with you? You don’t want to spend time with investors who will not be able to pay at least $1000 in earnest money. The investor’s ability to handle this amount quickly and without hesitation will tell you a lot about them. • Do you need to see the property? I have a few others who are interested but what’s the time I can show you what a solid deal this is?

  14. Step 2- Finding a Good REO Realtor • The secret is developing Relationships! Google REO Brokers in your town. Try www.REOBroker.com • Go online to www.Realtytrac.com (trial 30 day) • Ask other Realtors when you call if they have Realtors in their office who specialize in bank owned foreclosures and talk to them

  15. Sites to VisitTo Find Deals • www.homepath.com– My personal favorite • www.Wellsfargo.com • Bank of America - REO Search • Branch Banking & Trust (BB&T) - REO • Chase Bank - REO Search • CitiMortgage - REO Search • Countrywide.com - Now Bank of America • EMC Mortgage - REO Search

  16. More Sites for REOs • GMAC Mortgage- National REO Search • HSBC - REO Search • IndyMac Bank - REO Search • IAS - Integrated Asset Services - REO Search • M&T Bank - REO Search • People's United Bank - REO Search • Regions Financial Corporation - REO Search • Suntrust Mortgage - National REO Search • U.S. Bank Home Mortgage - REO Search • Wilshire Credit Corporation - REO Search

  17. Working With Realtors When you speak with REO Realtors(your language and what you say is important) Tell them what you are looking f0r -Have them put you on an automatic email list of all new foreclosures that come available! -Tell them you are a Real Estate Investor in the area and have cash to Buy and you have many buyers in your group (Real Estate Investing Association) that have cash and can buy quickly.

  18. Best Tip for Finding Deals • Ask your Realtor to send you the hot list every week of new deals and especially the deals that “have come back on the market” These deals have fallen thru some reason and now the banks will be even more anxious to sell that deal and you can get it for an even lower price!

  19. Working with Realtors Rule #1 – Always value the real estate agents time! They get paid when the deal closes they don’t get paid for pulling “comps”, sending you listings and showing houses. Of course they will do this for you, but not all the time! This is why I recommend having them “Write the offer” for you - they get both sides of the commission and they are more likely to keep helping you and working with you!

  20. Realtors You need to find a Realtor who is working with the banks to sell REOs or the Realtor should be an investor themselves so they know what you are talking about! Don’t work with Realtors who are uncomfortable making low offers.. Even to banks! You must consistently produce for the Agent. So getting one deal done and completed is KEY! Once this is done, that Realtor will trust you and help you find the next deal!

  21. Making An Offer • Proof of Funds • http://www.ivfinancialsolutions.com/pof/ • Have your Realtor make the offer for you! • MOST IMPORTANT THING TO PUT IN YOUROFFER: • A 10 – 15 Day INSPECTION PERIOD • (This is your OUT if you can’t find a cash buyer) • But that will not happen if you have your ‘BUYERS LIST’ CREATED!)

  22. Tips For Making Offers • Offers should be submitted on your State’s Associate of Relators Purchase Contract • Don’t ask for closing costs • Cash Offers • Submit your highest and Best offer off the bat. • The banks sit around and collect a ton of offers on their properties. Then they look at them and tell the Realtor they want highest and best. The you have to think about how much higher you need to go because you now that everyone else is going to be raising their offer. In the beginning when you submit your offer sit downand offer the most you are comfortable offering right off the bat. Write on the top of your offer HIGHEST AND BEST. Then they know you have been around the block and know what’s going on!

  23. More Tips on the Offer • Send a cover letter with your offer stating that the following main selling points • For instance: A short closing period (20- 30 days), short inspection period (10 – 15 days), all cash, buyer has visited property (many people are sending blind offers) and make sure you include all contact information. (Send this to your Realtor and have him/her attach it with the Proof of Funds Letter)

  24. How Low Should You Go? • The property is listed with the bank for $100K. • You want to offer your highest and best • I determined that the house will sell for and the ARV is $180k. There are 10k in Repairs needed. *** Keep in mind that banks will accept 15 – 20% less, but if you really want this house and the numbers work, offer 10% less on your first offer. I would probably write my offer for $90k and say “Highest and Best”

  25. Pricing • After doing a few deals, you will start to know your “market” and you will know better what to offer, leaving enough in the deal for everyone to make money. Remember the most important part here in this strategy is to GET IN AND GET OUT, RINSE AND REPEAT!!! DON’T GET GREEDY. • If you get the house under contract for $90k with 10k in repairs and the ARV is 180K. What would your wholesale fee be? Keep in mind you also have closing costs of approx. 3%. I would charge my new “cash buyer” $105K. This means he would pay $105k with 10k in repairs so he would still make a PROFIT when he sells. • The profit will Probably be about $40 – 50K (You have to leave room for the unknown such as more closing costs than you expected and for your cash buyer the possibility of more repairs then he/she had originally thought!

  26. What happens if you Buyer Walks? • This probably will happen if you do this for a while! There is nothing you can do! Your only recourse is that you will have gotten a earnest money deposit from them and you can keep that money so you do not lose anything except your time!

  27. You Always Need A Team • No one can achieve without the help of others! • Go to REIAs and network. Find out what the investors in your area are doing NOW. • This is one of the fastest ways to build your team of attorneys, title companies, realtors, private lenders because everyone at the group has contacts and will be more than glad to share them with you! You will find that people really do want to help other people!!

  28. Build Your Team Before the Deals Come! • Let’s talk about the people and resources that you will need? • Title Companies • Questions to ask the Attorney • Do you handle real estate transactions? • Do you work with any “short term” real estate investors who “flip” houses? • Do you have different rates for contract reviews. What is your rates? • Do you know of any attorney that you can recommend who has experience in these areas? I recommend that you can find an attorney who has other clients who routinely “flips” houses.

  29. Your Team • CPAs • Contractors • Real Estate Investors to “Shadow” • Finding mentors who can assist you in learning this business as it works in your local area. There is nothing better than spending time with an investor who you “connect” with and who inspires you! Try to find other people who are doing the things that you also would like to do!

  30. Understanding The Numbers.. Pass or a GO? • When is the deal good enough? • Focus on meeting the needs of your clients and your clients are your CASH REHAB Buyers! • What is the acceptable price to pass a property along to your cash buyers? • The key is to stay reasonable! Your profit should be $4k to $20k and the more you do this the more money you will make because it will get easier and you will know much more! • Know your FMV- Fair Market Value or ARV- After Repair Value- The property in ‘fixed up’ condition. • You must have enough in the deal so everyone makes money!

  31. Determining After Repair Value • You must find comps • Zillow.com • Realtors – They will be your biggest Help • Other properties for sale on the street • SiteX.com (the best but monthly cost) • Trulia.com See what has sold in the last 3months for the same sq. feet, same amenities, same bathrooms and beds.

  32. Property Evaluation • I will send you my ‘Property Evaluation and Repair Checklist’. It will be added to the Back Office today. This will help you estimate the repairs. • Your cash buyer will know this more than you. The more you know about the property, the easier it is to sell the deal to the next guy! Remember how busy these Rehabbers are? If you know the numbers (approx) it will make you look better as a wholesaler and they will respect you more. It is important that you can tell your cash buyer approximately what you think the repairs will be.

  33. Analyzing What It’s Worth -MAO • You determine that the house has an After Repair Value (ARV) sometimes called FMV, would be $200,000. Based on what you saw, you figured it would take 15k in fix up. • EZ Method: • $200,000 x 65% = $130,000 • Minus Fix up of $15,000 • This Equals Your Maximum Allowable Offer- $115,000 or “MAO”. • After you have determined you MAO, then you will decide what you will offer. Never go above the MAO! NEVER!

  34. Review…Steps to REO Deal • Build Buyers List • Make Offers and Get one Accepted by Bank • Call or email your cash buyers and tell them about the house. The more info the better! • Tell them it is a first come first serve basis! • Get it under contract with your cash buyer (get a deposit from them. I get the amount I had to put down with the bank!) Make sure they are paying CASH! (Get them to give you proof of funds)

  35. Submit your info to ivisionary for the 1day funding • Close the deal. With Cash there are no snags that can happen! You cannot close these deals if your buyer is getting a mortgage…(Unless they are using hard money and that is okay to do) • Now Rinse and Repeat!!!!!!!!!!!!!!

  36. This is what I use to send to my Cash Buyers Your Price- Only $55,000 Fair Market Value- $95,000 123 Main Street, Bridgeport CT 3/2 1200sq ft Very Good Condition, Cosmetic Repairs Needed only (Approximate $3k) Major Profit Potential on this one- you do the math! First Come First Serve! Call me at xxx-xxx-xxx

  37. Proof of Funds • You must have a proof of funds letter when you are submitting there offers. • http://www.ivfinancialsolutions.com/pof • Keep this website link above because this is where you get automatic proof of funds letter!

  38. One Day Funding Here is your website to get your One Day Cash http://www.ivfinancial solutions.com Transactional Funding For Short Sales and REOs Can Help You Break Into Real Estate Investing Without Any Of Your Own Money or Credit!

  39. Benefits of One Day Funding • The Benefits of Transitional One Day Funding is: • Provide the transactional funding for your first closing so you don’t loose your paycheck! • There are absolutely no credit or income requirements to qualify for our transactional funding. • You will have access to their experienced REO and short sale investors if you have questions about your deal!

  40. Finding Comps and Info For finding Comps and Info quick about a property • SiteXdate.com - Paid Site $37 monthly payment • MLS- needs a friend who is a realtor • Realtor.com- • maps.live.com • Zillow.com • Trulia.com

  41. Let’s ReviewMistakes to Avoid Mistake #1: Not Having Buyers Ready To Go Mistake#2: Working on the Wrong Deals Mistake#4: Not Speaking the Right “Language” to REO Agents Mistake#6: Offering too much for the property, not knowing your Maximum allowable offer – MAO! Mistake#7: Not knowing the Real Value - ARV Mistake#8: Thinking you need MLS Access Mistake#9: Getting Contractor Estimates on Repairs

  42. Building Cash Buyers List 1st! • First and foremost start building this list and continue building it. The more cash buyers you have the easier this strategy will be for you and less stress! • You will only have 10 to 15 days after you sign the contract with the bank, so if you don’t have your cash buyer, you will possibly stress out big time and possibly lose your great deal!

  43. Investor’s Dream/Or Handyman Special • This property will go Quick! • Property Address: 1234 Main Street • Asking Price: $42,000 • Estimated After Repair Value: $ 120 – 130k • Estimated Repairs: $15 – 20k • Details: Needs paint, carpet, tile, new kitchen, update and Finish bathroom

  44. Another Ad, Short and Sweet • Handyman Special • Worth $100k, Will Sell $45k • Call for details- 203-520-4506

  45. Why Wouldn’t New Investor Buyers make an Offer by Themselves? You might be saying if an REO is Listed on the MLS, why would that new Investor buyer put an offer in himself/herself? • They are busy rehabbing • They don’t have the time • They miss the deals because they are not looking for them all the time • Don’t want to be bothered finding deals! These rehabbers would rather be concentrating on getting their houses rehabbed and sold, not finding new deals.

  46. Why Investors will buy with your Help? • Why will an Investor buy from a Wholesaler? • Don’t have time • No Marketing skills • Cannot creatively structure a profitable deal • They work full time • Just don’t want to take time finding the deals

  47. New Deal I Am Looking At: Short Sale Approved! • On MLS for 45 days at $116K, Price lowered to $109k. • www.Google.com • I will offer 80K • Needs 10k Fix Up • ARV = $150k • My wholesale fee depends on what I get it under contract for. (probably $10k)

  48. Nancy Recommends • Ring Central for a telephone number- $100/yr • www.ringcentral.com • Bandit signs www.banditsigns.com • Vista Print for Business Cards – Free • www.Vistaprint.com • www.Sitexdata.com – 30 day trial • Want to watch your webinar faster or speed up your videos: Check this out: http://www.realestaterichesblog.com/go/enounce

  49. Bandit Signs • Check out this bandit sign I saw on the side of the street while I was in Florida out driving. • Using bandit signs is one of the absolute BEST way to attract local cash buyers. This example is good. But advertising a fake property for sale… is even better. Try something like this: • Do this and watch your Phone ring off the hook!

  50. Signs • 12 x 18 or 18 x 24 are cheap and still really work at pulling in very motivated sellers. Just realize you’re going to lose a TON of these signs each week but they work and they are cheap. Another good source is • www.supercheapsigns.com • My sign says “I Buy Houses” • Fast, Fair, Friendly • Call 203-555-1212 (make phone number large)

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