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The following article was published in our article directory on May 5, 2016.
Learn more about SpinDistribute Article Distribution System.

Buying Bank-Owned Properties: 7 Secrets

Article Category: Finances

Author Name: Gloria Alvord

How would you like to purchase a property around 40 % -60 % off of ARV? (After Repaired Value) It could be that you are possibly a person who would like to posses cash flowing rental properties, however, you are situated in a home market were the rents won't pay for the debt service, taxes, insurance, and repair and maintenance, and leave some for PMI (Positive Monthly Income).

Maybe you are a rehabber and you really want a residential property to "Fix and Flip". It could be you are a first-time buyer who really wants the most significant bang for your buck. It could be that you are just seeking for the best property value for your money. If the "deal" is more important to you than the property, investing in a REO (Real Estate Owned) from a bank may well be just right for you!

Now, banks nationwide are estimated to own over 1,000,000 SFRs (Single Family Residence).

Banking regulations call upon them to be disposed of, as the banks are not given permission to reap the benefit from them or keep them long-term. Unlike 5-6 years ago, the banks are no longer listing these properties with Realtors. If the current "shadow inventory" were shown on the MLS (Multiple Listing Service), the influences of over-supply could well push Real Estate values drastically back down once more. So, what are the banks doing to divest themselves of their REOs? They are selling them to real estate investors at surprisingly deep discounts!

If you are a knowledgeable Real Estate investor, a rookie investor, or just someone seeking for your own home, you can successfully buy a property from a bank! Today we are going to get to know the 7 simple ways to assembling an offer that will take hold of the Asset Manager's attention and warrant significant consideration.

1. Pursuit the right banks:
Financial institutions are not all the same! In today's overall economy, some banks are in solid financial condition and others are in major distress! Does it make sense that a bank that is in financial difficulty will, first off, be more anxious to sell their REOs and, second, be willing to sell them for less money? Here is a simple and easy technique to determine which banks are hurting! Just like us, banks possess a credit score. It is a closely secured secret that is never reviled to the public. It is knowned as the CAMELS score. And, just like our credit score, one part of CAMELS has the greatest consequence. The "A" in CAMELS represents "Asset Quality". Bank assets are their loans. How good are the loans they have been producing? We can obtain a fast picture of a banks financial health by determining their default ratio. Here are the steps: Go to www.FDIC.gov Search the financial institution by name, download a PDF of the most up to date quarterly report (K-10). Search the report for the line item that states "NPL" (non-performing loans), divide the NPL into the total number of loans to access the ratio. When the bank has a NPL ratio of 5 % or higher, they are in financial trouble and under close watch by the FDIC. They MUST move their REOs!

2. Posture yourself as a professional:
The Asset Manager does not have time to guide you to create an offer appropriately or hold your hand throughout the transaction. They really want to work with experienced Real Estate investors who currently understand what they are doing. One of the biggest troubles that individuals have addressing banks is getting the Asset Managers to take them seriously and granting their offers consideration. So now, we are going to find out how to supply them just exactly what they want! Even if you have never obtained a home from a bank before, with a tiny bit of help, you can make it seem that you are very skilled. When you talk with them, posture yourself a real estate investor. Do not say to them you are going to reside in the house! Go to www.vistaprint.com and have some reasonably priced business cards to send them.

3. Purchase AS IS:
Here is a situation that may sound bad, but effectively works in our favor. We will need to agree to purchase the home AS IS. But, here's the kicker, we don't get to see the inside of the place before we make our offer! Numerous REO homes are entirely boarded up and padlocked to keep out squatters and diminish liability matters. At the very least, the doors will be secured and all the window coverings drawn. We can't observe inside and there is no one to unlock the house up for us until we have an approved offer. We have to create our offer sight unseen! Now, this is why this is to our advantage. The bank will have received a BPO (brokers price opinion) as to latest market value. The broker can not access the condition of the inside, so they have to assume that the whole thing is flawless and no repair services are required. We know better and so does the Asset Manager! We, alternatively, have to conclude that everything is inside is gone and calculate our MAO (maximum allowable offer) with the costs of a full interior rebuild. The Asset Manager knows this and is anticipating offers of 40 % -60 % of the BPO! Realize, we do NOT have to acquire the home sight unseen, we just make our offer sight unseen. This brings us to our next step.

4. Property inspection Contingency:
The Asset Manager will not entertain any deal that has any subject to/contingencies besides the inspection clause. Several states have a 14-day inspection period making it easy for you to walk away from the deal for practically any reason. We want to include in our offer, a 10-day inspection time period. This alerts the Asset Manager to our seriousness and determination to the transaction. We would like them to understand that we capable to purchase and will act immediately and efficiently, not wasting a moment of their time. When our offer is approved the Asset Manager will provide a person to open the property so that we can have our property inspector conduct a thorough inspection. Supposing that we identify any unanticipated problems, we can walk away with no liability, or go back to the table and discuss a lower price. We are NOT obliged to obtain the property until after the inspection time frame has expired.

5. All Cash:
Our offer needs to be "All Cash at Closing". Do not ask the bank to finance their own REO! Do not make your deal contingent on another bank or lender funding the property. You must have your money prepared and be able to close immediately. This is one of the reasons banks no longer list their REOs with Realtors.

6. Fast closing:
Another tactic to show the Asset Manager our seriousness and commitment to the purchase is to agree to an extremely short closing timeframe. We prefer to close just within 14 days of their approval of our offer. Again, we want them to understand that we are all set to buy and will act quickly and efficiently, not squandering a minute of their time. It is very important that we have our funding ready and obtainable because we are going to make a substantial earnest money deposit.

7. Sizable earnest money deposit:

The last way we are going show the Asset Manager our seriousness and commitment to the transaction is to make a very significant earnest money deposit. $10,000 minimum or 10 % of the offer, whatever is higher. In case you are mailing in your proposal, do not include an earnest money check. Make the earnest money due to be deposited within 24 hours of the accepting of the offer. The banks, by law, have to deposit the check into their trust account. Even if they reject your offer! It could take you 7-10 to get your money back.

Even with little or no prior experience, by adopting these simple steps, you can now purchase significantly discounted Real Estate in any market in America!

About the Author: Gloria Alvord is an expert when it comes to saving money on insurance in California. To find out more money-saving tips on saving money on insurance in California, visit her website at http://sunnyvalecainsurance.com/.

Keywords: sunnyvale insurance, cheap insurance sunnyvale, allstate sunnyvale, auto insurance sunnyvale, home insurance sunnyvale

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