Information You Need to Know!
Each time an we publish an REO list, there are 100-200 REO's (bank owned properties). These lists are printed several times a month and are normally sold for $1.00 per property. When you call on one of our ads, we send the attached 3 page guideline - Negotiating ·with Banks for Their Foreclosures.
Included in our newspaper ad is:
1. The dollar amount of the bank loan foreclosed on.
2. The property address (all within San Diego County).
3. The bank information.
With this information vou have these oNions:
1. Buy the list and negotiate directly with the bank using these guidelines to make them an offer.
2. Employ The Furstenfeld Group to represent you exclusively to purchase the property from the bank (list fee waived and all commissions paid by the seller).
The sale date is the day that the bank foreclosed on the property. They now own the property. The unpaid loan balance, back payments, attorney fees and late charges is the total amount shown. The property is now free and clear. They can now sell the property for any amount and terms they agree on. Eventually they will be putting the property back on the market, usually through a real estate broker.
This sale date is called a trustee sale. On this date is the date the lender takes back the propeliy. Many times this trustee sale is postponed. This sale date was set by law at least 21 days prior to the sale. Many things can happen during the 21 days. For example; the owners can pay off the loan (unlikely), the owner and lender can renegotiate the loan terms, etc. The trustee for the bank can actually postpone the trustee sale 3 times without having to republish the new date. If you were following a propeliy prior to the trustee sale, you would never know if the sale was postponed or what the new date is unless you were there at the sale to hear the trustee announce the new date. Don't worry about buying at the sale, its all cash and you don't get a policy of title insurance. This sale is only for the very knowledgeable investors with a strong stomach.
NeJ!otiatinJ! with Banks for Their Foreclosures
Before you contact the bank be sure you obtain a pre-qualifying letter regarding how much a lender will loan you to buy the property. Also show proof of funds for the down payment and closing costs. If your offer to the bank has competition from other buyers you want to get prepared to show the bank you are qualified. Please see the enclosed page entitled Alwavs Make Multiple Real Estate Offers - Item 1.
The most impOliant key to buying from the bank is to find the person at the bank to direct your offer. Stay in contact with that person. Follow up, follow up, and follow up. This is also one of the hardest steps to do. Many times it is difficult to, 1) find the bank that owns the propeliy, 2) find the person within the bank to present your otTer to and
3) follow up with the same person regarding your offer ... all the time. One of the most important clauses to put in your offer is "Buyer has a right of first refusal to meet or beat any offer better than his". Of course the bank does not have to comply with this clause but it helps to remind them of it when you are making your follow up calls.
In the public notices from which we obtain through public records, the bank that is listed may not be the bank that is selling the property. There are so many different scenarios it's hard to find out "who is on first base". This often times takes detective work on your part. Start with the bank that's listed on the public report. If that is not successful, try calling or writing the trustee who held the sale. Their phone number is listed. Also contact a title company and ask for customer service for the latest recording infom1ation regarding ownership. Lastly, go to the county recorders office for anything related to the property. It has to be recorded at this office. Finally, go to the property and talk to the neighbors, leave a note on the door, search the internet, etc. You become the detective. Always make sure you obtain title insurance before you purchase a property. There are many items that could "cloud the title" on the property you want to purchase unless you obtain title insurance. Some examples are 2nd, 3rd or 4th mortgages, mechanics liens, hospital bills, lawsuits, other liens or the bank loan sold or transferred to other bank, private mortgage insurance company, Fannie Mae or Freddie Mac Insurance, environmental government violations, and many other items ... so get title insurance.
Whether vou 're an investor or owner occupant buver:
1. Find the value of the property you are considering buying. Check the comparable sales for sold, pending and active usually by searching the MLS (multiple listing services).
2. If you want the property regardless of price or terms - write an otTer to purchase at the price you feel that is acceptable to you. Forget about the amount of loan the lender foreclosed on. That loan is gone. You are in the driver's seat. Offer whatever price you want. Don't' worry if you're going to offend the bank. After all it is a free country.
3. Follow up 2 times per week. The squeaky wheel gets the grease. When following up don't phone or fax. Use hand or type written letters.
4. Make more than one offer at a time. Again, it is a free country. Otfer on 5-10-15 or more properties at a time ( Alwavs jlA.akeMultiple Real Estate Offers - Item 5).
When you first view the property, be carefiil. The previous owner or a tenant may still be living on the property. During the foreclosure process the tenants are not notified of any financial problems. In fact, many property owners continue to collect the rent long after they have stopped making the payments. If the tenant should confront an owner about legal problems, the owner, in many cases, will probably deny the foreclosure problems because they want the rent money for as long as they can collect it. .. legal or not. Also, if the old owner lives there, respect his space, after all he just lost his home. If the property is vacant you can look through the windows. Again, be careful. Just because you think the property is vacant doesn't mean it is. Somebody may have moved in illegally just for shelter.
When youfind the bank that owns the property they may still deny they own it even if you show them proof of ownership with a copy of the trustees deed with their name on it and the date it went back into their name. This is not unusual. These are unusual times. The volume of foreclosures is so big; many lenders do not have the staff to cope with all the propeliies. We do periodic surveys on the situation. For instance, in our last survey we found that of the 32 lenders that foreclosed on properties, over several days, only 4 of the lenders had listed the properties for sale through a broker 2 months after the date of foreclosure. The rest were not even on the market.
The bid will get bigger every day until the trustee sale is held. The interest clock keeps ticking. So does the legal fees, other fees, late payments, etc. So don't base your decision on what the old amount due was. The best way to find the latest amount owed is to contact the trustee. They are hired by the lender to file the legal notices for the foreclosure (notice of default, trustee sale, conducting the trustee sale, recording the trustee's deed). The lender usually pays them a fixed amount. The lender does not pay them to talk to 100' s of investors and answer questions. When you call the trustee keep your questions short and don't take up their time. They are very busy. They usually will not return your call promptly. Don't be offended ... be patient. Keep calling back if need be. Again - follow up, follow up, and more follow up. Even though you may be very upset at their delayed call or no call and never talk bad to them, especially do not threaten to sue them. Your name and number will be on their do not call back list. Always be polite to the trustee, their employees, lender employees - everybody, you will make more deals.
Another clause to write in your offer is "Buyer to have 21 days due diligence to inspect interior and have home inspector for report, county records, and environment problems". You don't need 21 days; you only need 5 to 10 days. Make your decision ASAP but leave a back door. You don't need many back doors - only one.
The process of negotiating with the bank and finding the right person to talk to can take anywhere from 1- 2 weeks or up to 6 months, even more. Some are more motivated than others. There is no timetable. Eventually they will all be motivated. Why? Because every lender that is insured by the federal government for customers deposit has to, by law, set aside their cash reserve for the dollar amount of foreclosed properties that they currently own. This cash has to be deposited into a non-interest bearing account. If the bank continues to accumulate more foreclosures, eventually they run out of "cash
reserve" money. At that time the govermnent inspector puts a gun to the head of the bank and says, "Either close your door or merge that with another bank". At that point an
bank employees and stock holders lose their job and the banks stock become worthless.
As you can see, sooner or later the bank becomes very motivated to sell their foreclosed properties at whatever price and terms. Sometimes the banks are in a position to help you finance your purchase of their foreclosures. They may even loan you rehab money.
If this time period appears to be too long or the bank answers to you are not what you want to hear, don't blame the bank employee or the agent. Don't kill the messenger just because you don't like the message.
Short Sales
Please See Our Short Sale Listings Enclosed
Short sales are prior to the trustee sales. The banks don't own the property. The owner still owns the property and he wants to sell. Unfortunately the loan owed that bank is larger than the value of the property. The seller requests a short sale package from the bank. This is a request from the seller to the bank to discount their payoff amount so the seller can sell the property. It is the banks decision to say yes or no or maybe. If the bank says no, eventually they will own the property. If you are the buyer on a property where there is a short sale pending, before the short sale package is submitted to the bank, review it yourself. Make sure every piece of paper is filled out, signed and dated. Make sure that all the "1's" are dotted and T's are crossed. If one thing is missing you will never hear from that bank again. The bank is not in the business to train buyers, sellers or agents on how to fill out sho11 sale packages. Have the escrow company fill out the seller's net sheet. They are the best qualified to do this. Don't try to fill it out yourself. Try to get yourself involved in the sho11 sale process. Communicate with the bank employee if the seller or agent will allow you. There is nothing like talking to the horse's mouth. Remember, this is your financial future. This is your step to becoming a millionaire.
A top foreclosure law firm has notified in writing to all of their clients that they are weeks behind in filing the notice of default, despite them hiring more employees. This will change, as the old saying goes, "Strike while the iron is hot". Sooner or later short sales may be bigger than bank owned properties. It doesn't make any difference ... you have to have the patience to pursue your dreams.
This foreclosure market we are in right now will not last forever. The market will eventually get better. .. maybe months, maybe years. As you know, life is a series of adjustments. Life is a moving target. Those who make a purchase now, manage the property, and have the patience to wait, will be the millionaires of tomorrow. The new crop of millionaires is already beginning to form. Nobody that I know of is making anymore real estate.
A new home builders in Southern California will have to pay $90,000 or more just for fees to build a home. As the environment laws grow and the government continues to mismanage the tax-payers money, the builder fees will grow. The builder still has to pay for the land and cost to build plus complying with an government regulations regarding employee law and fees.
Whatever you do, don't quit. Remember, "If it's going to BE, it's up to ME". |