We’ve now made hundreds of bank offers- we began this strategy (not including the 1990’s) in December 2006).
In the beginning, we managed to make some mistakes either by a) spending hours barking up the wrong trees, or b) writing offers incorrectly so that we managed to “displease” (mild understatement) not just one bank representative.
You would think that a property that is completely vandalized, condemned by the city, has broken windows, and has been on the market for 120 days might be a shoe in. NOPE. Trust us, we spent HOURS chasing these.
We finally realized that a bank is not a person, and has to rely on policies and procedures (i.e. won’t drop price more than 10% until it’s been on the market 30 days, 60 days, or whatever- this is just an example all banks and asset managers are different).
The sooner you memorize and learn these four words, the faster you will make money and with less effort:
…BANKS ARE NOT RATIONAL!
95% of your chance of nailing a scorching deal comes down to one thing.
This one thing is the starting listing price. If you can nail a property out of the gates that is within 10%-15% of your target price, you are most likely home free. Sound easy? Not quite, simple yes, easy no.
You see, the lending institutions are overwhelmed with properties they have to quickly find value for and liquidate. They have no efficient way to do this, and must rely on third party “freelancers” who charge a fee to do what is called a Broker’s Price Opinion (BPO). The woefully understaffed and cash strapped banks have to review these BPOs and come up with a listing price. Some of the banks even outsource value reviews overseas!
Almost always the prices are too high, the bank would rather err on the upside and then drop the price. But sometimes, they come out way too low. This is rare but if you are on top of it and offer fast, the deal is most
likely yours. The other golden time to strike is following a massive price reduction on the property ($30,000 or more). This is why we probably spend 80% of our time studying values. These 3 words will also make you money: KNOW YOUR VALUES.
…that’s why we advocate mastering a smaller area over trying to work an entire city.
Knowing values and being the first to make an offer on a bank owned property that comes out too low or following a massive price reduction is the NUMERO UNO method of landing a steal from the bank. (Lowballing a property out of the blue almost never works, even if it is in bad shape).
Be Happy and Prosper
Kurtis and Cindy Squyres
FarBelowMarket.com
http://www.FarBelowMarket.com
http://www.FlipForeclosuresForProfit.com
Kurtis and Cindy Squyres
Tags: bank foreclosures, FarBelowMarket.com, flipping real estate, Kurtis and Cindy Squyres, Learn To Wholesale, Palm Springs foreclosures, REOs
August 22, 2009 at 8:27 pm |
I like to submit low offers that have documentation with pictures and estimates of what the property really needs to sell at there price. Then I wait until everyone falls out of escrow because BA and Wells cant get out of there own way. This puts you on deck and surprisingly at bat more often than not!
August 23, 2009 at 5:24 am |
beautiful…do most of the bank brokers take the info into consideration?