Think Like A Bank To Get Your REO Offer Approved

Buying REO (Real Estate Owned) homes takes creativity and patience: You must negotiate with banks, your offer may or may not be accepted, and the whole process can take months.

Problem is, many REO investors don’t think like banks. They believe their offer is fair, the property has languished on the market forever, and they can’t understand why the bank isn’t returning their calls.

All of this may all be true, but remember it’s the bank that holds the key to REOs; the buck starts and stops with them. Without accepting your offer, you don’t have a deal. A little homework before you make an REO offer can lead to a lot less headache in the long run.

Your goal is to get the bank to say “yes” to your offer. The more you know about the factors a lender uses to evaluate a REO properties can result in a smoother sales process and, ultimately, bank approval of your offer.

Evaluate Your REO Deals Like A Bank

No matter how much your offer is, the bank is going to always think the property is worth more. It’s that simple. Lenders agree to an REO based on a percentage of what banks believe is the “as is” value of the property. Every lender has a different approval percentage, and these figures can change.

Your goal is to offer just enough so that the lender quickly approves your offer; nothing more and nothing less. Knowing the approval percentage is half the battle; the other part involves the as is property value in the lender’s eyes.

This is determined by the broker’s price opinion (BPO), which involves three comparable sales, three active listings, local market conditions and other evaluations. The BPO is typically conducted by a real estate agent and also includes an interior and exterior “drive by.”  Many lenders also use appraisals.

Bank Evaluations Are Also Important In REOs

The bank doesn’t just rely on outside evaluations; internal evaluations from their REO or special assets department also weight heavily in the decision making. The valuation department can assess a property’s worth, as well as use tools that real estate professionals use.

Finally, the lender uses the BPO, appraisals and internal evaluations to determine the property value and base their decision on a percentage of that number. Sometimes, the bank’s loss mitigation rep will tell you the number.

By thinking like a bank, you can offer enough so that the bank says “yes” to your offer.

You Don’t Have To Own Properties To Be Successful in Wholesaling

Many novice real estate investors believe they have to own properties to be successful, but you can become just as successful with wholesaling – and you’ll never have to own a single property!

This makes wholesaling one of my most popular avenues for real estate investors. When you wholesale, you don’t take ownership of property. No title or deed ever changes hands.

Wholesaling depends on three things:

1. Getting a property under contract.
2. Assigning the contract to another buyer.
3. The buyer closing on the property – and you collecting your check.

It’s really that simple. There are no banks involved and no offers that involve months of waiting to approve. There is very little risk and you can become a wholesale investor with little or no money. Best of all: You can make money on property you don’t own.

Let’s take a look at three steps crucial to wholesaling.

Step one: Find a property

Finding a property is the key to successful wholesaling. Your property must have sufficient equity in order for you to make a profit. Your property must have enough equity or profit margin for you as well as the buyer to make a profit.

Step two: Start building your buyers list.

Rehabbers are your best friend. Run a newspaper or online ad or place bandit signs with the following info:

• Handyman’s Special!
  Great deal for rehabbers!
  Call 555-555-5555 today.
  OR
• Investor special!
  Thousands below market value. This deal won’t last! Call 444-4444!

Your phone will soon begin to ring. When it does, get investors’ names, numbers, email and other information and put it in a database. This is valuable information, because this is your list of potential buyers. Run your ads for the next three months – even if your properties sell.

Your goal is to collect as many names and contact info as possible. The key to wholesaling is finding a buyer. The quicker you find a buyer, the quicker you get paid.

Step three: Negotiate a deal with a rehabber

You’re deal has to include enough cushion for you and the rehabber to make money. If it doesn’t the deal just won’t work.

Let’s say a house is worth $100,000 in good condition. The homeowners are in foreclosure and have to move quickly. They owe $50,000 on the property but need $5,000 to move and pay for a deposit at another home. You offer $55,000, but the house is worth $100,000 in good condition, not counting about $15,000 in repairs that need to be made.

You have a rehabber and you agree to sell it for $65,000, with $10,000 as your fee. The rehabber will fix up the property and sell it for market value and make a potential profit of $15,000 to $20,000. It’s a win-win for everyone, the foreclosed homeowner, you as the assigner and the rehabber.

Step four: Get Ready To Close On Your Wholesale Deal

The best part with wholesaling is that you never have to own anything; you just find the people to make the deal work – the motivated homeowner and rehabber – and go to closing. It’s that simple, and everyone wins with wholesaling.

Wholesaling Offers Opportunities For New Real Estate Investors

Anyone can get started wholesaling real estate – even new investors with absolutely no experience.

You don’t need lots of money or excellent credit. You don’t a special license. All you need is the commitment to become a successful wholesale investor.

Wholesaling Real Estate 101

Wholesaling real estate is quite simple:  A wholesale investor is the middleman. Think of them as the person who finds deals. As a wholesale investor, it’s your job to find a seller, put the house under contract and assign a contract to a buyer.

You don’t have to worry about repairs or financing. You get money for setting the deal up and leading the investor to the deal. Essentially, wholesale investors are paid a finder’s fee to find deals for investors.

It’s not your job to worry about renovations, loan- to-value ratios or how the deal will be financed. All you have to do is find good deals for investors, get the house under contract and you’re paid.

Wholesale Investors Depend On Motivated Sellers

Your success in wholesale investing depends on one thing: motivated sellers.

You’ll need motivated sellers to find the bulk of your deals. Motivated sellers are anyone who has to sell their home quickly. They come from all walks of life, but they are typically in foreclosure or can no longer afford their mortgage.

These days, there is an almost endless supply of motivated sellers. With so many homes in foreclosure and real estate that’s stuck on the market, there’s no shortage of sellers who are desperate to sell.

You’ll need motivated sellers to make your deals work. Remember, they’re desperate to sell their homes. As a wholesale investor, you’re probably the answer to their prayers.

Investors Are The Final Piece Of The Puzzle

Motivated sellers aren’t in short supply. But you still have to find a buyer for the deal. That’s where investors come in. You can find investors at real estate investment clubs and advertising “We Buy Houses Fast.”

All you have to do is get the house under contract for a price that allows the investor to make money

Wholesaling is a fast path to cash for you and if you would like to automate this entire process then come see the final demonstration of a system called FreedomSoft that does the entire business for you!

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Real Estate Investors Benefit With Short Sales

Once uncommon, real estate short sales are now the norm.

The plummeting housing market in the United States, combined with record numbers of foreclosures, has caused an explosion in the number of short sales or pre-foreclosure sales. These sales occur when the homeowner and the mortgage lender agree to sell a home for less than what is owed to another buyer.

And they’re ripe opportunities for investors to buy homes and properties at below-market values.

The Benefits of Short Sales

Pre-foreclosure sales offer benefits to buyers, sellers and investors: The new buyer buys the home for the “short” amount with built-in equity and at a much cheaper price. The previous owner avoids foreclosure, saves their credit rating, and is generally able to buy a home again after a few years. The short sale investor gets the investment property at below market value pricing.

The Short Sales Market

With millions of foreclosed properties dragging down their balance sheets – and forcing some banks to close their doors – short sales are driving the troubled housing market.

These sales are popular for one primary reason: One in every 136 homes in the United States is in foreclosure, according to recent figures from RealtyTrac Inc.

Many of those homes are potential candidates for short sales. And,  as job losses mount, even more homes may be sold this way – and serve as a boon to real estate investors who want to buy homes with instant equity at low prices.

Banks In The Short Sale Business

So many homes are in pre-foreclosure or foreclosure that banks have set up departments to handle the overflow. The bank isn’t in the business of holding or maintaining foreclosed homes; it costs time and money to maintain a home in default. The bank loses money when the property is in foreclosure because no one pays the mortgage.

So, selling the property at a lower price is often the best option for the bank compared to not generating any income at all.
Here’s where short sale investors come in. Most banks have a process for short sales. With a bit of patience – it takes anywhere from three to nine months to get your deal approved — you can get investment properties at great prices.

The process can be cumbersome so it’s best to use an experienced short sale agent or negotiator. It can take months for the bank to accept your short sale offer, but the benefits may very well be worth the wait.

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Here is video of Susan, Kala, Zeus, and me having a fun Christmas Night decorating our Tree…

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Lease Options Offer Opportunities In Slow Real Estate Markets

If you’re looking to unload properties when the market hits a snag, lease options are one of the industry’s best-kept secrets.

A lease option is an agreement between a buyer and seller that gives the buyer the option to buy a house at the end of the agreement. The seller must sell the property if the buyer decides to exercise the option to buy it. The seller also agrees that they will not sell the property to anyone else before the option expires.

The buyer is the lessee (the person who leases the home) and the homeowner. At the end of the lease, the lessee has the option to purchase the home. This method of buying homes has become more popular as the real estate market has slowed to a crawl.

Lease Options Offer Options For Real Estate Investors

Lease options offer opportunities in up and down markets.

As an investor, you stand to gain, especially if the lessee decides to purchase the property at a higher cost than what you could receive on the market for it at the end of the option.

What’s so unique about lease options is that most of them – 95 percent – aren’t exercised. This means plenty of opportunities for sellers. In exchange for a lease option, sellers often require a down payment and monthly rent payments are generally higher.

Typically, the option is within two or three years or enough time for the buyers to qualify for financing. Lease options are commonly used options for people who want to own a home, but don’t qualify.

If the seller doesn’t exercise the option to buy, they don’t get a refund on their downpayment. That income goes to the property owner. The downpayment is typically 3 to 5 percent of the set purchase price, although prices can vary.

Leasing Options Offer Benefits To Investors, Buyers

There are benefits for both buyers and sellers: The buyer gets a house at a pre-determined price. The seller gets more income from the buyer and a better quality tenant who is usually committed to taking good care of the property.

Many buyers resort to lease options when they can’t sell their homes using traditional real estate methods. Lease options allow the homeowners to keep income coming in from rent as well as tax advantages.

If you would like to learn more about lease options then you can download a FREE eBook by going here…

CLICK HERE TO GET A FREE BOOK

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Wholesaling homes has never been so popular: Thousands of real estate investors are eager to capitalize on the lowest real estate prices in history, but many don’t know where to start.

Many novice wholesale investors think you need lots of money or excellent credit to succeed. Or, they think there are complicated classes or licensing.

I’m going to show you how anyone can get started as a wholesale investor – even someone with absolutely no experience.

Wholesaling Explained

Usually, there’s a lot of mystery about wholesaling. But it’s pretty easy when you think of it in these terms: You are the middleman. It’s your job to find a seller, put the house under contract and assign a contract to a buyer – nothing else.

You don’t have to put any money down, hire an attorney, conduct a closing or anything else that is involved with traditional real estate. You collect a check for setting the deal up.

Wholesale Investors Depend On Motivated Sellers

The difference between success and failure in this business boils down to one thing: motivated sellers.

It’s your job to find motivated sellers, folks who unfortunately find themselves in foreclosure or who have to sell their homes quickly. Motivated sellers are a literal goldmine.

These days, there is an almost endless supply of motivated sellers.

The battered housing market – the glut of unsold homes, record low housing prices and epidemic levels of foreclosures — is a wholesale investors’ best friend.

Finding Buyers

You’ve found motivated sellers. Now all you have to do is find buyers. But you aren’t just looking for any buyer; you’re looking for cash investors. This is where your fee comes in. You are paid a finder’s fee by the buyer to find the deal.

You’re the broker, and it’s a win-win for everyone involved. Desperate sellers have a buyer for their home and investors save time, money and hassle finding deals on their own. You’re literally handing investors deals.

There are plenty of these types of investors looking for deals. Usually, they’re the folks you see advertising “We Buy Homes.” Or, you can attend local real estate investment meetings to find buyers who are looking for deals.

Now, get the house under contract for a price that allows you and the investor to make money.

Here’s the process:

1. Find a motivated seller
2. Agree on a price that lets you sell the house quickly and make a profit.
3. Get the house under contract.
4. Put a clause in the contract that allows you to assign the contract.
5. Find a cash buyer.
6. Make sure the buyer closes.
7. Cash your check.

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Can You Buy REO Homes For Pennies On The Dollar?

The late-night TV commercials are all too familiar: Buy REO (Real Estate Owned) homes for pennies on the dollar!

But can you?

For sure, real estate investors can benefit from the glut of REO properties now on the market. These properties are foreclosures that go back to the mortgage company when they aren’t sold at auction.

They end up at the bank, waiting for investors like you.

REOs For Sale

These deals offer plenty of potential for savvy real estate investors. Buying REOs is a smart strategy for seasoned investors. With so many homes in foreclosure – an estimated one in five homeowners owe more on their homes than what they’re worth – real estate owned properties are just one way that successful real estate investors can cash in on bargains.

Generally, most foreclosed homes aren’t sold at auction because the bank is owed more than what the property is worth. It goes back to the bank and becomes an REO property.

Now what? The mortgage loan is erased. The bank may handle the eviction, do some repairs and negotiate with the IRS for tax liens. Now, here is where you as an investor come in.

What To Look For In Bank REOs

Not every real estate owned property is a great deal.

· Make sure your offer is comparable to prices of other nearby homes.

· Factor in the costs of renovations.

· Keep your eye on market value and don’t feel pressured to pay more.

You should do the same due diligence on bank-owned properties as you would any property that you buy.

Each bank may have a different process for selling homes, however, they’re all concerned about the bottom line. Banks aren’t in the home business, but they have dedicated departments that do nothing but sell and manage this type of inventory.

Making An Offer

The bank will sell the home “as-is” without any warranty. Before you make an offer, make sure you find out the following details:

· Are there inspection reports you need to see?

· Find out what work, if any, the bank has agreed to perform.

· Find out how long it takes for the bank to accept the offer.

· Find out how your agent must deliver the offer.

Once you make an offer, be prepared for the bank to counter offer. This is normal, and you should plan for this.

Make sure that your offer includes an inspection period that allows you to end the sale if there are damages that you didn’t anticipate. Your offer should be easy to accept and should include a pre-approval letter for your REO home.

There is a lot of talk about Social Media and Web 3.o Strategies and I think this video does a great job clearing up exactly why you need to be getting involved to make Big Money in this Economy!

You have hundreds of thousands of buyers at your finger tips with the click of a mouse!

Watch this Video Now!

The importance of Concentration is something that escapes most people and is the direct effect on slow production!

This is why mastering concentration holds so much value and should be the number one task on your To Do List.

Theron Q Dumont states this best – “To make the greatest success of anything you must be able to concentrate your entire thought upon the idea you are working on. The person that is able to concentrate utilizes all constructive thoughts and shuts out all destructive ones.  The greatest man would accomplish nothing if he lacked concentration.”

This is one of the most powerful statements within the book Power of Concentration.  It truly brings home how important it is to concentrate in order to succeed.

It is easy to say than do…

Every single day we are faced with challenges that interrupt our concentration and slows down our production.  The key is to identify these challenges, these interruptions and eliminate them out of your day.

Here are a few examples….

Obsessive Email checking

Answering every phone call

Unscheduled meetings

Negative People or Time Vampires…This is the biggest challenge.  These are the people who don’t want to be productive and feel it is their job to ruin others production.

Day Dreaming

These are just a few examples of concentration breakers.

What I want you to do is figure out what interrupts your day and start correcting it by elimintating it out of your life!

Here is how I handle the examples that I mentioned…

I return my emails and phone calls 2 times per day during pre-scheduled time slots.  I spend no more than an hour each time and if it doesn’t get answered at that time then it moves to the next day time slot.

I will not entertain a meeting that I did not schedule.  If someone just pops in and asks if I have a minute my response is simple: “I am very busy at the moment,we will have to schedule a time to talk at a later time. I am available from 1:00-1:15pm today…Does that time work for you?”

Concentration + High Production = FREEDOM

If you want to gain the freedom you want out of life and all that it has to offer you then start spending some quality staying focused!

Talk to you soon,

Nate Kennedy

PS. If you would like to learn more about getting a higher level of concentration and become a Millionaire faster then you might want to check out this book over at http://www.millionaireconcentration.com/