7 Techniques You Can Use Today To Buy Bank-Owned Properties in Alabama
Would you like to buy Bank-Owned Properties Alabama for 40% to 50% off of their After Repair Value (ARV)?
In recent times, banks nationwide are figured to own over 1,000,000 SFRs (Single Family Residence). Banking policies call for them to be disposed of, as the banks are not permitted to reap the benefit from them or keep them long-term.
Perhaps you an individual who would love to obtain cash flowing rental properties, however, you are established in a marketplace where the rents won’t pay the debt service, taxes, insurance, repairs, and maintenance, and leave some for PMI (Positive Monthly Income). Maybe you are a rehabber, and you need a residential property to “Fix and Flip”. Maybe you are a first-time home buyer who desires the greatest bang for your buck. Or, you are just looking for the very best property value for your money. If the “deal” is more crucial to you than the house, buying
Or, maybe you are a rehabber, and you need a residential property to “Fix and Flip”.
Maybe you are a first-time home buyer who desires the greatest bang for your buck. Or, you are just looking for the very best property value for your money. If the “deal” is more crucial to you than the house, buying a REO (Real Estate Owned) from a bank may be just right for you!
Compared to 5-6 years ago, the banks are no longer marketing these homes with Realtors.
If the present “shadow inventory” is posted on the MLS (Multiple Listing Service), the influences of over-supply can direct Real Estate amounts rapidly back downward.
So, what are the banks doing to do to strip themselves of their REOs?
They are unloading them to real estate investors at surprisingly deep discounts!
Key Takeaway: You have to understand how to get the Asset Manager’s interest so that your offers can warrant considerable consideration.
Pursuing The Troubled Banks Gives You An Edge
Banks are not all the same:
In today’s economy, some banks are in sound financial condition, and others are in major stress! Does it make good sense that a financial institution that is in financial stress will, before all else, be more anxious to sell their REOs and, second, want to offer them for less money?
Just like us, banks possess a credit score.
It is a very closely safeguarded secret that is never revealed to the public. It is called the CAMELS score. And, just like our credit score, one part of CAMELS has the largest consequence.
The “A” in CAMELS denotes “Asset Quality”. A bank’s assets are the loans they make. How good are the loans they have been producing? We can get a swift picture of a bank’s financial health by finding out their default ratio.
Here is a quick and easy way to learn which banks are hurting:
First of all, go to www.FDIC.gov.
Position Yourself as a Specialist
The Asset Manager does not have precious time to instruct you to craft an offer adequately or hold your hand through the deal.
They would like to work with skilled Real Estate investors who already understand what they are doing. One of the leading problems that consumers have addressing banks is getting the Asset Managers to take them seriously and granting their offers consideration. So today, you are going to discover how to provide them just exactly what they desire!
Here’s the good news:
Even if you have never purchased a house from a bank before now, with a tiny bit of help, you can make it seem that you are very knowledgeable. When you speak with them, posture yourself a real estate investor. Do not share with them that you are going to reside in the home!
Here are a couple of initial tips:
When you speak with them, posture yourself a real estate investor.
Do not share with them that you might reside in the home!
It’s challenging to buy a REO if you don’t know what you are doing:
They would like to work with skilled Real Estate investors who already understand what they are doing. One of the leading problems that consumers have addressing banks is getting the Asset Managers to take them seriously and granting their offers consideration. So today, you are going to discover how to provide them just exactly what they desire! Even if you have never purchased a house from a bank before now, with a tiny bit of help, you can make it seem that you are very knowledgeable. When you speak with them, posture yourself a real estate investor. Do not share with them that you are going to reside in the home!
Tip: One simple way is to visit www.vistaprint.com and have some inexpensive business cards to send them.
Be Prepared to Buy Homes In As-Is Condition
Here is a situation that may seem undesirable, but effectively works in our favor. We need to agree to acquire the home AS IS. But, here’s the kicker, we don’t get to check out the inside of the property before we make our offer! Countless REO homes are entirely boarded up and secured to keep out illegal tenants and minimize liability issues. At the very minimum, the doors will be secured, and all the window coverings closed. We can’t observe inside, and there is not anyone to open up the house up for us until we have an agreed upon offer. We have to produce our offer sight unseen!
Now, here is why this is to our benefit: The bank will have secured a BPO (brokers price opinion) as to latest market value. The broker cannot take a look at the condition of the inside, so they have to assume that everything is perfect, and no repair services are going to be needed. We, on the other hand, have to speculate that everything is inside is gone and gauge our MAO (maximum allowable offer) with the costs of a total interior rebuild. The Asset Manager knows this and is counting on offers of 40%-60% of the BPO!
Key Takeaway: We do NOT have to invest in the residential property sight unseen, we simply make our offer sight unseen. This carries us to our next step.
Use a Property Inspection Contingency
The Asset Manager will not entertain any deal that has any subject to/contingencies except for the inspection clause. Many states come with a 14-day inspection time enabling you to walk away from the deal for virtually any reason. We want to include in our offer, a 10-day inspection period. This tips off the Asset Manager to our seriousness and commitment to the transaction. We would like them to understand that we are capable of the purchase and will act immediately and efficiently, not throwing away a moment of their time. When our offer is accepted the Asset Manager will provide an individual to open the property so that we can obtain our property inspector conduct a detailed inspection. If we discover any surprising concerns, we can walk away with no liability, or revert to the table and negotiate a reduced price. We are NOT obligated to obtain the property until after the inspection period has expired.
Make An Offer That is All Cash
Your offer needs to be “All Cash at Closing”. Do not ask the bank to finance their REO! Do not make your proposal contingent on a different bank or lender funding the property. You will need to have your funding available and be able to close fast. This is one of the main reasons banks no longer list their REOs with Realtors.
Create An Offer With a Quick Closing
One more approach to display to the Asset Manager our seriousness and commitment to the transaction will be to agree to an extremely short closing timeframe. We wish to close within 14 days of their accepting of our offer. Again, we want them to understand that we are ready to purchase and will act quickly and efficiently, not wasting a moment of their time. It is very important that we have our funding ready and accessible because we are going to make a large earnest money deposit.
Have a Large Earnest Money Stake In the Offer
The final way we are going display to the Asset Manager our seriousness and commitment to the purchase is to make a very considerable earnest money deposit. $10,000 minimum or 10 % of the offer, whatever is higher. If you are mailing in your proposal, do not include an earnest money check. Make the earnest money due to be deposited within 24 hours of the approval of the offer. The banks, by law, have to deposit the check into their trust account, even if they decline your offer! It could take you 7-10 to get your money back.
Even with little or no prior background, by following these simple steps, you can now invest in deeply discounted Real Estate in every market in Alabama! For yet another discount Real Estate strategy, enter your email address below to receive our next blog post on how to prepare a short sale deal and help a struggling homeowner prevent foreclosure!