Have you been making offers on REO’s only to get frustrated that none of your offers are getting accepted? I feel your pain and frustration. This is something that I have also been struggling with.
So why are our all of our offers getting rejected at such a high rate? There are a few reasons that I can think of. First of all, the banks have received so much federal bailout money that they are not hurting as much as one would think; therefore they are not pressured to liquidate their inventory fast. In fact a lot of their inventory never even makes it to the market, but rather quietly slides into the “Shadow Inventory” category.
Secondly, we have been competing with first time home buyers who are looking for a deal and beginning investors who are looking for rentals and plan on doing a light rehab rather than a full blown rehab, which enables them to offer less than most of us do. But don’t feel bad, the dirty truth about a lot of these investors is that their inexperience causes them to get hurt financially in the long run. I get calls from these types of investors all the time asking me how to get out of trouble with these properties. Unfortunately the only thing I can tell them is that they have no choice now but to hold on to the property for the long run and hope that the market value increases to recover their losses. I have even had two recently that came to me for help after they out bid me on the same property. Opps...
So how can we improve our odds of getting our offers accepted? The answer is twofold. First of all, time will work in our favor. Most of the first time home buyers are out of the market and the ones that are left are starting to look for completely rehabbed properties. This will eventually drive down the prices of the REO’s that need rehabs, cosmetic face lifts and code compliance.
Secondly, I have just recently developed a new set of tools to help more accurately determine the rehab costs and a Scope of Work, worksheet that is automatically generated from the Repair Estimate Worksheet, that can be submitted with your offers to the banks to help justify you offers.
How To Video’s
If you don’t have a free account with www.RealEstatePromo.com, then you will need to create one in order to watch the “How To Video’s” and you will need to upgrade to a premium membership to use the Repair Estimate Worksheet and the Scope of Work.