Are bank-owned property prices negotiable

In this #WordWednesday, we are doing a followup to last week's post and are now answering the question: Are bank-owned property prices negotiable?

Short answer: Sometimes. :)

In some cases, a bank is willing to accept offers on REO listings. Banks may list with an online host and schedule an auction 30 days in the future but allow "pre-auction bids" prior to the sale. Not all banks do this. But if a bank allows the bids, you can offer your highest/best and if they accept it, the schedule online auction will be taken down/cancelled. Sometimes I hear from customers who say they were watching and watching a listing then suddenly it disappears....and it's because they accepted an offer so the sale is closed/removed. 

In many cases, the online bid will start at a low 'grab attention' price because that works well in the larger, more populated states. In smaller states like Missouri, this model is annoying because it isn't the "reserve price" as the the opening prices. So investors note that they may bid many times without hitting the reserve and not win.....although I have heard of some buyers who said the bank accepted the lower 'offer' when it didn't pass reserve status....so there are opportunities out there!

Are foreclosure prices real and are they negotiable

On this #WordWednesday, we will address the question: Are foreclosure prices real and are they negotiable?

The foreclosure price is technically called a "credit bid". And no, it is not negotiable. It's the set price that the bank is willing to buy back the "asset". If no one bids higher during the foreclosure auction, then that is the price they purchase it back at. And it's not always the full value of the loan.
What I've noticed in calling sales is that it's often a percentage of the debt - maybe 30% or 70% or more. When the credit bid is exact, such as $37,546.31, then that is the total debt.
A sale of the total debt doesn't necessarily mean that people don't want the property. We still see buyers for those credit bids with exact numbers because it all depends upon condition and the value of the property.
People often ask "Are there good deals?" Well yes, it all depends upon what 'a good deal' means to you though. Remember that different exit strategies work well for different types of properties.

Are foreclosure and REO websites legit

On this #WordWednesday, I'm answering a question I saw online: Are foreclosure sites legit?

I've been a foreclosure auction manager for three years now and yes, it's a real job. If the property doesn't sell at the foreclosure sale, it becomes bank-owned. And the bank can choose to use my company's site to host an online auction and yes, it's a real sale. 

The real estate meetings that I go to every week have investors that share their stories every time about an online auction purchases (REO or 'bank owned') and their interest in watching me sell in-person at the courthouse (foreclosures). Many stories are complaints but many stories are also successes. I've even heard of a story where a guy bid online for a house "on a dare" and then won! And yes, on the website he signed a legal agreement to pay upon close of the online bidding....so he did and put another $20K rehab money in and said it turned out to be a pretty great house!

When I first started attending REIA meetings, investors often said, "You're real!" And I'd ask what they meant. And they would note that they thought the online sales were just some web-based hosting company.....and were delighted to meet a local rep to answer their questions!

If you are struggling to understand the world of "distressed properties", I encourage you to attend a local investor meeting group. Many are found by googling "REIA" or by looking at Meetup or similar sites. One of my favorite local meetings is called MAREI and you can check out their website.

Let me know if you plan to go so I can make sure to say HI!

Which liens survive foreclosure

Working on our #WordWednesday to answer questions I often hear when running foreclosure sales at the Missouri courthouses....

Taxes will always be 'superliens' on the property and go before any other lien-holders....always...in every state. There are websites out there to find out the all the specifics (one was mentioned in an earlier post). But it is important to know which liens survive a foreclosure for your area.

To start with the basic answer: We will guess that it's the first lien-holder foreclosing; so a primary loan with a mortgage company. If they are foreclosing, in Missouri, I've heard that the successive liens 'go away'. So there is a chance the HELOC loan and/or the mechanics lien will be wiped out after the foreclosure sale date. We do advise looking into Home Owner Association (HOA) rules because if there is a large unpaid balance, the strict HOA's may require the new owner to bring current.
*One time I heard an investor tell me the HOA of their new property 'required' them to pay the $2,000 that was due for their property!

The hard answer: It may depend upon what lien-holder is pursuing foreclosure. If it's a second lien-holder foreclosing, the buyer at that sale will also have to pay off the first lien in order to fully own the property! So may sure to complete due diligence.


**Disclaimer. Definitely not giving legal advise. I know a great attorney (ask if you want to know too). You can also try LegalLeague100. Just sharing my personal experiences to help my personal goal to cultivate growth in and around me.

When do foreclosure auctions occur

#WordWednesday this week is on the phrase: "When do foreclosure auctions occur?"

I work in Missouri and foreclosure sales happen every day of the week. When I answer this question, a lot of investors at REIA meetings seem surprised. And often they seem more surprised when I tell them that it's different in every state - for example, in Georgia the state only allows ALL foreclosures to be conducted on one day per month....which we call "Super Tuesday" and can have upwards of 300 properties sold with hundreds of buyers on that one day.

Many foreclosure sales in Missouri occur during the morning hours - such as 9am or 10am. And that's a perk of being a foreclosure auction manager.....getting to work in the morning and having the afternoon off! The status of the properties can change at anytime though. Some days, the trustee gets a call from the bank literally as they are walking up to auction the property. It can be cancelled or postponed for a variety of reasons.

The more I learn about jobs in real estate the more that I'm impressed at such a variety in people-types and skill-types. It's such a neat industry with so many moving parts and so many ways to make money and meet awesome people!

How do real estate foreclosure auctions work

#WordWednesday for the week is the phrase: "How do real estate foreclosure auctions work?"

Many people I speak with at real estate investor meetings are surprised by the answers when I tell them there are often only 1 or 2 buyers at the auctions.

Last week, I noted a few details about buying so I'll share a bit more about how they work at the time of sale....
Upon arrival outside of the courthouse (in Missouri)....literally ON the courthouse steps that is the county seat for that area...the Trustee who is handling the sale will ask buyers for proof of funds - meaning, most require a cashiers check IN HAND at the sale to be allowed to purchase; some require a letter of credit.
Most people arrive a little prior to sale time because many sales only take about 5 minutes to complete. The trustee reads disclaimers and their details then the legal document is "cried" (think of a town crier walking thru the streets 100 years ago). After the "credit bid" is offered, anyone in the public can bid $1 or more over.
Some counties may have 3 attendees, some may have 7, but many have only one buyer. Once the hour strikes, the sale is 'cried' (think: Town crier from 100 years ago) and within a few minutes the property is auctioned - bought by either a person (labeled a "third party") or by the bank ("returned to bank"). And that's that folks!
If you've bought before, I'd love to hear your experience from Missouri and any other states!

Note buying: What is a land contract?

Learning about some new topics while studying for an upcoming investing class on buying notes.

Today's article helped me understand about a concept less discussed in my circle of real estate investors: Buying Land Contracts.
I'm looking to buy notes to create everyday income as well as create a snowball with my IRA investing (building up with little purchases that will pay out anywhere from 11% to 89% return on investment!!).

Photo I took of the land around us near a glacier on a trip to Alaska

Here is the opening blurb that really focused the terminology for me:

"The reason you first got into real estate investing was to own property. Buy and hold. Let the tenant pay the mortgage. A strategy that is a solid, conservative, time-tested approach. As time has passed, maybe your objectives have changed. Maybe holding real estate assets no longer fits your goals or lifestyle. Your properties are leased. Selling with a tenant seems challenging. Why not consider selling TO your tenant? Not a lease-option. Sell that investment property your tenant calls “home” to the tenant.

A different investment option is selling with a land contract to your great tenants. Land contract is a frequently used option that allows an owner to sell their property while earning a nice return by creating a paper investment."

Credit: www.wilmothgroup.com/land-contracts

Excited to get started! If you are looking to start with as little as $5K (cash or IRA money), let's talk! If you are looking to sell your note, let's talk!

Hours that people work in real estate

(Snuggling my puppy on the floor when he was watching out the front window on a weekday afternoon)

I think I have the 'fun' version of working in real estate. My foreclosure auctions usually occur in the mornings and my real estate investor meetings are a night or two each week. So that means I have most afternoons off to do my other gig = being a mom to four boys and wife to a husband who's a nurse. That means that many days are the best of both worlds - work a little and still have time to help kids with homework, get all the soccermom driving duties done, and snuggle too! I definitely don't have my balancing act together to get home cooked dinner on all evenings - there's always areas I need to improve (for real!). But I'm pretty happy with opportunities right now.

When I was a kid, I remember interviewing and job shadowing professionals but I never knew exactly what I wanted to "do". I know many real estate investors that are working hard but their ventures require them to work crazy long hours. (Which I used to do in corporate event planning but is why I don't do that anymore!)
My son is starting middle school and being asked the annoying question of "What do you want to be when you grow up?" I say annoying because who really knows this answer? I never have. In whatever venture I've sought after, I did my best to enjoy it....and am doing so with real estate!

A recent video I saw on LinkedIn said it quite nicely - There is work/life balance. There's only life. And what you do with life is your balance.
**May you find your balance!**

Who are your favorite friends

(Bailey Family photo from 2015 - Husband of 13 years and boys aged 8, 6, 4, & 2)

For my Friday posts, I'm going to go with the theme #FriendsFriday. I'll try to answer the question of "Who are your favorite friends" by featuring my favorite investors that I meet at all the REIA meetings that I go to...the movers and the shakers that are crushin' it. A business club that I was in had the concept that: Marketing is best done when your company is promoted by others, giving it a seal of approval. That way your already established relationships can find the people they need to know to do business instead of you just promoting yourself. So I'll highlight different people that are rockstars in the Kansas City real estate market.
But for this first #FriendsFriday post, here are my absolute favorite people....my husband and "the Bailey boys".

What is my "Why"

On Sundays, I'm going to call the posts #SundayFunday. I like websites that personalize the business experience. A phrase I hear often in real estate meetings is: Find your WHY or What is your WHY...... meaning that working hard gets tiring and you need to know your reasons to work hard so that you can be successful.
Earlier in June I went to a three-day training on investing in note buying. And let me tell you. It was boring and overly detailed and hard stuff to learn. Spending 27 hours talking and learning about a topic is not usually how I prefer to spend my weekends.
On the start of the second morning, I am reminded of one of my whys......my kids.

When my brain is already feeling tired and overloaded, I opened my notebook to see a drawing of dragons created by my 6 year old. And then they had donuts...one of which I picked just because it had sprinkles because it's a favorite of my two little boys. (Every Sunday, our church has the yummiest donuts and it's a tradition for all four of our boys to get a donut when they help me in the nursery. Ridgewood Donuts are the best!)
As things get hard, remember your why and push past the worry to find success!
"I'm convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance." -- Steve Jobs


**Facebook - If you'd like to connect on FB (or LinkedIn), I post some of these thoughts on social media.
Investor MatchMaker on Facebook here
Rachel May Bailey on LinkedIn here

How to buy real estate foreclosures

For this #WordWednesday, we are addressing the phrase: "How to buy real estate foreclosures."

The short answer is - It's different in every state. Look at ForeclosureLaw.org to get details state by state.
A little longer answer is - Understand the basic rules for states that are judicial or non-judicial.
The judicial states will involve the court which means longer cases since the files go infront of a judge (and more expense). Many judicial states have a process that takes at least 120 days. In New York, it can take almost 2 years!!
The non-judicial states do not involve a judge and are run by trustees (lawfirms) so they are less expensive and take about 60 days.
Where I work as a foreclosure auctioneer is in Missouri which is a non-judicial state so the process has a trustee oversee the legal portion and my employer advertises the sale online.

So.....for the how in Missouri....
Look online or in the county newspaper for the listing; ads starting a minimum of 21 days prior to sale date. Contact the trustee who is handling the sale to see how they collect funds - most require a cashiers check IN HAND at the sale to be allowed to purchase; some require a letter of credit. Arrive a little prior to sale time and be ready to bid $1 over the "credit bid". Once you win, you will fill out an agreement to wire the remaining funds to the trustee. Many of the regulars have tips about their buying process so never hesitate to go watch a sale.
If you go to an auction, please comment here or on Facebook and let me know about your experience!!