I’ve always been a fan of working with partners on REO deals, because if you find someone that has been working on Foreclosures, Short Sales, or REO deals for a long time, they really know the ins and outs of the deals, and what to expect. I have found many partners that also don’t have very much knowledge about REO deals, and they are very difficult to work with.
Preferably, I like to work alone when it comes to deals on REO properties, but because I’ve been doing them for so long, I often get asked for assistance in working with banks, lenders, and the agencies you typically see that own the properties.
There are some Real Estate agents that typically will ask me to simply facilitate the deal with them, and I will charge them a flat fee to do so. Or ask me to be the communication barrier between them and the lender.
When I’m working with banks on these deals, I have a few questions that I like to ask.
- What is the typical process that the bank will need to go through to agree to sell the property?
- How many people or boards need to sign off on the deal?
- What is the typical closing time frame in processing a deal of this nature?
- Where is the closing held? At the bank, or another location agreed upon by all parties?
- If asking price is offered, can we expect a counter-offer.
Normally, banks are able to, or willing to answer these questions, but sometimes they will not answer anything at all. But the questions are always expected, and lenders know full well that some sort of these questions will be coming their way.
In the past, I’ve dealt with banks and partners that have been very difficult to work with, and those partners receive much more attention from a communication standpoint. I do this to build a relationship, because I am going to continue working with banks on REO properties for years to come. Some of the relationships that I’ve created started out very roughly, because people will negotiate very differently on a number of issues. I know what to expect when communication gets rough in these deals, but mostly it’s me who has to educate my partners when working on a REO deal.
I’ve met some very good Real Estate agents that are very smart when it comes to foreclosures, short sales, or REO deals. But they always have a ton of experience in the Real Estate field, and they typically are on the same page with me in terms of what to do in specific situations. I will ask any Real Estate agent if they are a rookie at REO properties when I first come into contact with them.
I’ve met some great Real Estate Agents that will not work at all on REO deals, and although I try to assure them that they can work through the rough parts of doing these deals, they say that they don’t want to waste the time it takes to close them. They are right in the regard that it can take a long time to work through these deals, although there are definitely times when that does not hold true.
In the end, like I said, I would love to work by myself on these deals, but there is almost always partners, whether they be other Real Estate agents, lenders, or outside entities that must be involved in the deal.
Bottom line, you can’t get away with doing REO property deals without any knowledge from someone that has done them in the past.
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