Buying REO properties

[naburza]

Does anyone have experience with buying bank owned properties? If yes, I would have more detailed questions.

thanks,

[CafeMonkey]

I would say yes, but in my area, they're going for ARV... And they're in terrible shape!

[naburza]

My question is this than, buying the property from the bank you might get it under market value. Negotiating with the bank for a lower price for the first note, but what about the second note and the attorney fees, etc? How do you take title if you don't own the property for long, because your doing a double closing on the same day?

If you need more info just email me.

[CafeMonkey]

Wow, you have a couple of different questions in there!

Negotiating with the bank for a lower price for the first note, but what about the second note and the attorney fees, etc?

Don't worry about underlying financing. Generally, REOs are properties that were loaned against, and were foreclosed on. When that happens, there is NO loan in the property, it is owed free and clear.

Now, that's not to say that the bank doesn't have certain expectations... Quite the opposite! Say Bob bought a house worth $100k, with 100% financing. After six months, he stops making payments, and they start building up with late fees, etc. He claims bankruptcy, more fees, and in a year and a half, the bank has invested $105k (original amount plus attorney's fees), but is fully expecting $125k from the homeowner for past due payments, and they foreclose. The question is... What to offer?

The answer is simple. Base the offer on the property. Pull comps, determine repairs, and submit an appropriate offer. The bank "wants" $125k, but they understand that this house was worth $100k BEFORE this bum moved in with his twelve rottweilers and eight teenagers. (Been there. Dogs crapping in the floor as I was viewing the property.)

How do you take title if you don't own the property for long, because your doing a double closing on the same day?

First off, I don't recommend a double closing for a REO. But if you must, I don't think it matters how you take title. You're only going to have it in your name for a few minutes, so personally or in the name of a Corporation doesn't really make a difference.