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.