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Friday, July 3, 2009

REO Wholesale Flip. Play by Play.


Sooooo....I got a deal under contract and sold yesterday! This is a different deal than the Hooker House I wrote about last time, which I am going to pass on.

I'm pretty sure this was the fastest I've ever sold a deal. And it was all done via text.

Here's how it went down....

2:32 pm- Phone call from listing agent of a property I offered on this past Monday. It went to highest and best, and I offered 21k (10k over list). She said there were 20 offers on the property, and they had it narrowed down to 3, one of which was mine. She told me if I verbally agreed to their new terms, she could get my offer pushed through. They wanted 10% in escrow instead of the 1k I offered, and everything else was the same. I agreed to the new terms.

Oh, and she also wanted to verify that I was giving her both sides of the commission, including the 3k bonus to the selling agent. I'm sure this had nothing to do with me getting the offer accepted.

5:07 pm- Email from listing agent telling me they are taking my offer, and that I need to sign bank's addendum and return it within 48 hours, along with earnest deposit.

5:50 pm- After going to look at the house one more time, sent the following text message to my favorite buyer: "Hey Favorite Buyer, I just got a house you are going to like. 123 Main Street. 1200 sf frame, carport, fireplace, comes with extra lot. Nice street. Lock box 8590. Asking 29k."

6:35 pm- Text from Favorite Buyer: "20k."

6:36pm- Text to Favorite Buyer: "27k."

6:36 pm- Text from FB: "24k."

6:38 pm- Text to FB: "26k. Work with me here."

6:39 pm- Text from FB: "OK. 26k."

6:39 pm- Text to FB: "Cool. It's scheduled to close on the 24th. That OK?"

6:40 pm- Text from FB: "OK."

6:42 pm- Text to FB: "If you're around this weekend, we can meet to sign everything. Just let me know when."

6:46 pm- Text from FB: "OK, no problem."

And there you have it.

I probably could have found a buyer for more than 26k, but I'm always one to take the quick nickel, especially if it is from one of my solid buyers. This will be the 4th house I've sold to this guy this year, and the 6th since last summer.

Just to give you a little insight as to how important it is to make clean offers when you're bidding on a hot REO property..... the agent told me there was an offer of 30k on the table, but they wanted a 7 day inspection period. My offer was 9k less, but had zero contingencies.

It also helps to bribe the agent by giving them both sides of the commission. Especially when there is a 3k bonus being offered..

OK, Gotta run..

Have a safe and fun-filled 4th of July!

I just added Patrick and Trevor's Private Money Blueprint to my list of recommended courses. If you have time this weekend, check out the free videos- there's several hours of quality content for your viewing pleasure...


Shae said...

Congrats Steph - now THAT is sweet! Good tips let me ask...When you were first starting out and didn't have buyers in your hip pocket that you KNEW would want the properties, did you still do no inspection contingency?

Also I just want to understand the 3k you ensured the listing agent would get both sides of the commission PLUS you offered to pay an additional bonus of $3K (and its your end buyer who will be paying this)?

Sanford Collins, CPA, REALTOR® said...

Nice deal! Thanks for sharing that one. So it sounds like you make your offers direct to the listing agents?? Do you ever make offers through a buyer's agent?

Steph said...

Hola Shae,

When I started out, I would use a 7 day inspection period. As I got more comfortable with what I was doing, I reduced it to 5 days, then 3, then 1, then zero.

The 3k bonus to the selling agent is being given by the bank, not me. I'm not that generous. :)

A lot of times they will offer a bonus to the selling agent if the property is sold by a certain date.

This is just another example of what idiots the banks are.. they priced this house so low that there is no way it's not going to sell within the first few days of hitting the market. There's no reason to offer a 3k bonus to the selling agent, other than to waste money.

I think it's hilarious.


Shae said...

Ok, I was wondering how in the world that was going to work! Thanks for clarifying for me. Yeah, that's pretty dumb of the bank when they are listing a property for practically nothing.

I've really gotta figure out how I'm going to handle these multiple offers at list & higher scenarios. That's pretty much all I'm running into at this point in Broward county on properties at $100K and under.

Steph said...


I've found you have a much better chance of getting your offers accepted if you are giving away both sides of the commission.

I used to make offers through a friend of mine who is an agent, but now I mostly make them directly through the LA.


I usually don't bother getting into bidding wars, but I was 99% sure I could sell this one to my Favorite Buyer in the mid to high 20's, so I went for it. Glad I did. :)


Shae said...

Yeah, I'm glad you did too :-) As for me, needless to say the direct marketing campaign to get non-MLS deals is starting up very soon :-)

Anonymous said...

Is the contractor's lockbox code on every bank-owned property in the entire USA 8590? If it's a dial combination lock, are they all OON or AMN? Just asking...

Steph said...

8590 is the most common one around here. Also.. 7631, 7381, 2313..


I keep a running list in my Blakberry, :)

Steph said...

Ooh, forgot one- 4535! Bank of New York uses that one.

Anonymous said...

Hi Steph,

I am starting out. If I get one of my offers accepted in Tampa. Would you be willing to JV With me and sell to your buyer?

Steph said...

Hi Anon,

I'm always willing to partner on deals. If you get something under contract, I will be happy to take a look at it.


Anonymous said...

Hi Thank you. I am currently looking at a 3/1 for 19k. 1500 sq ft. Assessed 56k. It's in the hood. Average price per sq ft within 1/4 mile around 124 per sq ft. Needs full rehab.

I am not sure if this will fit your investor parameters?


Anonymous said...

If you don't have the listing with you when you drive by and you want to get in, you can just run through the list. 90 percent of the time you will get in. The best part is they say they use these things to control entry because the MLS lockboxes aren't secure. WTF? Where I am, the Supra lockboxes record the identity of the agent opening the box. No electronic key issued by the MLS? No entry.

Steph said...


It really depends on the location and condition, and whether it's block or frame.

Is this something you have under contract?


Alex Rodriguez said...

Hey Steph, congrats!!! So good to hear of your successes!!

On my end, I'm getting a bit frustrated at some n00b mistakes I've made. For one, I had little idea that frame houses were such a big deal (yeah, that shows my n00bness). I put out signs for the houses as I told you, and have received a ton of calls. Kept a log of all calls, which is good because now I have a list of potential buyers in Pasco and in St Pete.

However, I think I'm coming very close to getting out of the contract for these houses. I feel they may be overpriced to what buyers are looking for, and I simply can't afford to go down in price.

This is frustrating, but I'm learnin'... :(

Steph said...

Hi Alex,

Yeah, you have to be careful with the frame houses. They've gotta be CHEAP, and even if they are cheap, there are a lot of investors who won't touch them.

Even if these deals don't work out, now you have a much better idea of where you need to be price-wise in the areas where these houses are. This is something you can't learn in a course. You have to get out there and DO. Most people aren't wiling to do that, but that's how you learn.

Keep up the good work, and Happy 4th!


Steph said...

Also wanted to add.... make sure to be nosy when people are calling on your signs. Ask them what they are looking for- investment property or house to live in, how are they planning on financing the purchase (hopefully they are paying cash), what areas they like, etc. etc.

That's how you build your list. :)

Alex Rodriguez said...

Yeah, I haven't been as nosy as I should have, because I was taking calls on signs left at two areas, a FLOOD of calls, while trying to do some work at my house at the same time. :(

Good thing is I have all calls logged, so I may go back and call a few of the more motivated ones, and then run the "interview" process.

I totally see what you say re: that this information is not taught in any course. That's the only thing keeping me from utter frustration, it's a lesson learned.

What do you do to inform the (agent / title company) that you'll be getting out based on the inspection contingency? Do you need to send a formal letter, an email? What do you usually say?

Steph said...

I've only done it twice, and it's been awhile... I think you have to send something over in writing to both the agent and the title company. Check your contract to see what it says. It's prob best to give the agent a call and let them know that way, and then ask them if you need to get them something in writing.

It is frustrating in the beginning, but it's just part of the learning curve that you have to get through. Learning the market is the toughest part of the equation, and it takes some time to do, but if you are willing to put in the work (and it seems like you are), then you will start doing deals soon enough.

I don't know how many offers you've made, but I made over 120 before I got my first REO deal. I made a commitment to myself that I would keep going no matter what. And that's what I did. :)

Alex Rodriguez said...

Yeah, we've put out something like 25 offers in the last few weeks, and I may have needed to grow suspicious when I got 3+ accepted.

I am wondering how to not piss off the listing agents who were looking forward to working with me. I gues if I'm getting out on an inspection reason, it's lessgrave than if I just refused to close. At least I'll be giving them proper notice.

Wow, stil getting calls today, my sign campaign musta been the best in the world! Even the hard money guy you referred me to called up! Amazing ! LOL

Oh well, this has all made me stronger and more knowledgeable. I'm never ashamed of my n00bity in anything. Failure at this point is for the stupidly proud. My philosophy is that I win, no matter what. I'm down the hole in money invested, and of course time, but what I've learned in such a relatively short time has been invaluable.

Sorry if it sounds like I'm self-cheerleading, but you've been a great help to speed up my learning process. So heartfelt thanks to you!

Steph said...

Nice attitude, Alex. :)

You need to be really careful when you are putting something under contract. If you start backing out all the time using your inspection contingency, you are going to lose credibility fast.

When I was getting started, I would always shop the deals around while I was still negotiating with the bank, just to see if I was in the ballpark or not. If I didn't get any bites, I would not move forward with the deal.

It also helps to have a buyer or two already lined up, so you know what they are looking for ahead of time.


MattF said...

Haha thanks for the codes!

PAS is a common one for the letter dial, NME- I found works a little on the 4 letter ones.

I'll have to try the others on a few places I know of...I also have some keys but they don't work all the time :(

Steph said...

My pleasure.