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REAL ESTATE Dealing with the bank is a PITA

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J P D

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Nov 6, 2007
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Hey guys,

So...I posted about my experience buying my first investment property a few months ago and the whole process went off without a single hitch. Everyone did what they had to for the deal to go through in only three weeks time.

Not being content with one property and wanting to take advantage of these market conditions I set out to find another property. This time I was looking for a great deal on a small single family that I could do a quick cosmetic fix up on and rent out until the market turns and then sell, using the profit for future property funding. So I find a nice bank owned property in the same area that I bought my 2unit, needs carpet and paint but not much else. It has been on the market for 140 days. Great location for a rental and best of all, going for about 55 cents on the dollar (when rented, should cash flow about 400 a month in my pocket after all expenses). House sold for 125 back in 04 and is now offered at 70k. I offered 60k with financing in place and have everything in line to grab this property with no problem. Well, there is a problem, the bank is just sitting around doing god knows what. I put in my offer two weeks ago and sit anxiously day to day waiting for a reply. Every time we contact the office handling the sale, they say that the offer is just sitting in a pile of paperwork and they'll get around to it soon.

Anyone have any tips to get the bank moving?? I'm really starting to get frustrated with these people.
 

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JScott

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Most banks staff their REO units with just a couple people. Even in a typical RE market, it can take a while to get around to all the offers and paperwork. In today's market, where banks are probably seeing 3x the number of foreclosures than normal, it just takes a lot longer.

From everyone I've spoken with, there's really not much you can do but wait, wait, wait...
 

phlgirl

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Dealing with the bank IS a PITA…… and that is why the deals are SO good. Hang in there. Jscott is right – you will have to wait, wait and then wait some more but it sounds like it will be worth it. :)

These people are overworked. Feel free to call and check in with them but do your best to be the Brightest past of their day – not just another whining client. These reps deal with angry callers all day long – if you are pleasant and understanding of their situation, they might work a bit harder on your file. Tell them a joke.

Be as patient as possible. Ask them what you can do to make this process easier for them, as opposed to asking them to work harder for you.

Sounds like a good deal. Congrats on the forward progress, JPD.
 
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J P D

J P D

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Nov 6, 2007
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Chicago, Il
So I find out today that the property has been sold for $60,500.00 which is only $500 more than my offer. How did this happen??? well, the bank had the property listed with an auction service that was due to end Friday as well as being listed with a broker. Had I or the broker known this I surely would have tried to up my offer a bit to get this place under contract.

I'm not going to loose any sleep over it though, there are plenty of other deals out there. Just kind of sucks to hear that you lost a property by $500.
 

NoMoneyDown

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Aug 28, 2007
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So I find out today that the property has been sold for $60,500.00 which is only $500 more than my offer. How did this happen??? well, the bank had the property listed with an auction service that was due to end Friday as well as being listed with a broker. Had I or the broker known this I surely would have tried to up my offer a bit to get this place under contract.

I'm not going to loose any sleep over it though, there are plenty of other deals out there. Just kind of sucks to hear that you lost a property by $500.
I can empathize. I came across a HUD-listed property that had been out of the OOO period for a little over two weeks. It had 2-3 really lowball bids right when it went to all bidders, but nothing else. I submitted an offer for something like $75,500, thinking since it only had a couple of lowball bids and my price was realistic, I would get the property. Lo-n-behold, I found out the next day that someone put a bid on it the previous day as well for $250 more than mine. It was so highly coincidental I thought maybe there was some underhandedness going on, but it turned out to be one of those rare things that happen (I think ... hmmmm).
 

andviv

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NEVER do an offer with a "round" number.
Offer $76,523.15 instead of $75,000
Why? Cause you don't know who is offering $75,500 and you can beat for that little extra.
Besides, it gives the impression to the people at the HUD or REO office that you have put extra effort in estimating the right value.

And yes, you are right, there are just too many deals out there these days.
 

NoMoneyDown

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NEVER do an offer with a "round" number.
Offer $76,523.15 instead of $75,000
Why? Cause you don't know who is offering $75,500 and you can beat for that little extra.
Besides, it gives the impression to the people at the HUD or REO office that you have put extra effort in estimating the right value.

And yes, you are right, there are just too many deals out there these days.
There are many things I've found bidding on HUD properties that help me fine-tune it a bit more. For instance, I was told by a seasoned RE agent in my area who is a big HUD lister, who told me that she had never seen HUD accept an offer for less than 87% list price in my area for a home that's been on the market <1 month. Some areas in the country may be lower, some areas it may be higher, but I've found her advice was spot on for me and my area, which helped me to streamline my offers more. Also, while it may be true HUD will look differently at an offer of $76,523.15 vs. $75,500, you have to remember that this is a government agency and not a private seller like and individual or bank, and the truth be told is they only care what the NET value they get in a deal - period.
 

andviv

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Also, while it may be true HUD will look differently at an offer of $76,523.15 vs. $75,500, you have to remember that this is a government agency and not a private seller like and individual or bank, and the truth be told is they only care what the NET value they get in a deal - period.
Glad to know that banks are staffed with people, while government agencies are not, and the banks does not care about NET values, as opposed to government agencies (sorry, had to make fun of this). At the end of the day it is just humans dealing with these offers. They do have rules and see once and again the same offers... 70% or 75% of FMV or asking price, in a round number. What do you think will stick in their heads? a $75K offer or a 'weird' offer? Something different will be noticed by the people working on these offers, that will make it different. That could be good enough to get their attention and make a difference between a winner bid or the next "I lost that deal for $500"
 
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J P D

J P D

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Nov 6, 2007
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Andviv, I'll have to try throwing out a weird offer next time around, but it would help if I am made aware that the property is being listed at auction. Moving on... I found another property in my area that looks promising, a little out of my price range at the moment but it never hurts to throw an offer out there. It's not a foreclosed property yet but from what I gather it is nearing that point so maybe I can capitalize on that. I'm trying to find out what is still owed on the property and base an offer off that.

I am finding that the property hunt and due dilligance process is far more exciting than the actual ownership aspect.

I would really like to get ahold of another property, especially with the deals that are out there at the moment and then take it easy for a year before doing any more deals. I know a lot of people advise to set a goal of one property a year but I figure why not two a year and realize success that much quicker?? Am I wrong in thinking this?
 

JScott

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I know a lot of people advise to set a goal of one property a year but I figure why not two a year and realize success that much quicker?? Am I wrong in thinking this?
Yes, you're wrong for thinking this...

You should be thinking about at least 3 or 4 or 5 properties a year...or as many as fits your plan, your time, and your financial means...

When it comes to money, keep in mind that more is better... :)
 

bflbob

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I would really like to get ahold of another property, especially with the deals that are out there at the moment and then take it easy for a year before doing any more deals. I know a lot of people advise to set a goal of one property a year but I figure why not two a year and realize success that much quicker?? Am I wrong in thinking this?
In my experience, the biggest hurdle is buying the FIRST property.

It doesn't do any good to set a goal of 2 per year or 3 per year or 200 per year...
...if you don't actually buy that first one.

Sometimes you get stuck on the 'planning' phase, and miss out on the 'doing' phase.

The only other bad thing I can say about setting a 'number per year' goal is this...
...if you set a goal of 5 houses, and are driven to achieve it...
...you might find out you do deals that aren't as profitable as they should be...
...just to hit the 5 per year goal.

Shop smart.
 

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Jill

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Lots of good advice here, BFLBOB. I'm one of those who need a little more nudging to get off the fence. The decision is made, and I'm in the process of making plans, but I find myself waiting for all the lights to turn green before leaving home!

Speed to you!++
 

bflbob

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Lots of good advice here, BFLBOB. I'm one of those who need a little more nudging to get off the fence. The decision is made, and I'm in the process of making plans, but I find myself waiting for all the lights to turn green before leaving home!

Speed to you!++
Thanks for the rep!

I've been guilty of the same overplanning issue.

But if you wait to get all your ducks in a row, you'll find many of them have become dead ducks.

Oh boy...sometimes I quack myself up.:rofl::rofl::rofl:
 

andviv

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Rep++ Bob. Great advice.
I can only answer to J P D's question by saying that, even by buying 5 properties a year (which would demand maybe more time than what I had available due to my full time J O B) I wouldn't reach my financial goal in the timeframe that I had determined. Just creating the spreadsheet with the purchase information may look easy and show you great numbers, but this does not reflect the management involved in that many SFHs.

This meant a change in plans. That's when I decided to go for real economies of scale and made the switch to multifamily properties.

Again, nothing "wrong" with your plan, it just wasn't the right one for me.
 

Yankees338

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In my experience, the biggest hurdle is buying the FIRST property.

It doesn't do any good to set a goal of 2 per year or 3 per year or 200 per year...
...if you don't actually buy that first one.

Sometimes you get stuck on the 'planning' phase, and miss out on the 'doing' phase.

The only other bad thing I can say about setting a 'number per year' goal is this...
...if you set a goal of 5 houses, and are driven to achieve it...
...you might find out you do deals that aren't as profitable as they should be...
...just to hit the 5 per year goal.

Shop smart.
Good points.

As MJ says, "Opportunity doesn't care about your timing!" If a good deal is there, there really isn't any reason to pass it up (assuming it makes sense).
 

bflbob

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NEVER do an offer with a "round" number.
Offer $76,523.15 instead of $75,000
Why? Cause you don't know who is offering $75,500 and you can beat for that little extra.
Besides, it gives the impression to the people at the HUD or REO office that you have put extra effort in estimating the right value.

And yes, you are right, there are just too many deals out there these days.
I ALWAYS bid on eBay that way.

I won a nice camera by $.01 by bidding the odd amount.:smash:

Now, I just randomly pick the last 2-3 digits.

I don't want someone figuring out that I always add $.01.:nonod:
 
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J P D

J P D

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Nov 6, 2007
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Chicago, Il
All great points.

I think for my first year into investing I would be best to play it a bit conservative. Two properties should give me a good starting point. I will spend the next year networking with local investors and just see how everything goes. I don't plan to set any yearly limit for my investing strategy, but rather to learn to recognize a good deal and jump on it. I do plan to get more aggressive as I move along and start getting into larger deals and more often but for now I'm just getting started so I'm going to take it slow and feel things out. There's no sense getting in over my head just to end up like so many others out there. I've done pretty good at managing my financials so far and would hate to mess that up just because I stretched myself too thin.

andviv, this next property would probably be the only sfh that I purchase (besides my personal 20k sqft residence that I will buy in a few years). I am looking to get into 20 plus unit complexes and other commercial properties down the road. Right now though, taking into consideration my financial situation, picking up one of these sfh's for 50cents on the dollar and renting it out until the market turns and then cashing out of it would then provide me with a nice chunk of money to go, say, 20% into a larger deal with some investors. It is not my plan to buy 2 sfh's a year, sorry if I gave that impression.

bflbob, maybe i misunderstood your reply, but I have already bought my first investment property, a 2 unit. I am now looking for my second investment property.
 

andviv

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Right now though, taking into consideration my financial situation, picking up one of these sfh's for 50cents on the dollar and renting it out until the market turns and then cashing out of it would then provide me with a nice chunk of money to go, say, 20% into a larger deal with some investors.
Understood.
I had the same idea in my mind some time ago. But then, I have no clue when the market will turn out. It may be a great plan, especially if the market turns in "just" 5 to 7 years. But I am planning to be out of the rat race by that time, so like I said, that plan didn't work out for me.

How's your duplex doing? I remember you were moving to the lower level unit, and raise the rent for the upper level. Is everything moving along as expected? I assume it is going well from the property management perspective as you are ready to pick up the next one....
 

NoMoneyDown

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Glad to know that banks are staffed with people, while government agencies are not, and the banks does not care about NET values, as opposed to government agencies (sorry, had to make fun of this). At the end of the day it is just humans dealing with these offers. They do have rules and see once and again the same offers... 70% or 75% of FMV or asking price, in a round number. What do you think will stick in their heads? a $75K offer or a 'weird' offer? Something different will be noticed by the people working on these offers, that will make it different. That could be good enough to get their attention and make a difference between a winner bid or the next "I lost that deal for $500"
I've worked at a couple different jobs within the federal government, and can assure you that standards and protocol will almost always rule over any human psychological element. Again, the bottom line to a HUD reviewer is the NET amount they get. They don't give two cents about anything else. What's so screwed-up about this is that sometimes they end up shooting themselves in the foot because they are so process-driven. For example, last year I watched a house go from $45k down to $28k over a span of several months. It had a couple of bids in the $5k-$15k range early on, but they weren't accepted. The winning bid ended up being $3,000 (gross, not net), because it sat so long afterward.
 

Bilgefisher

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I'm not sure how I missed this thread, but I'll add my two words in dealing with the bank.

Two words; Patience and Persistence.

Banks have many layers to get through to get approved with any financing. It takes time to get all the way up the chain and then all they way back down. Be patient.

That doesn't mean just sit idly by an twiddle your thumbs. In many cases your just another name and number. If you sit and wait and wait, you will just continue waiting. Get on the phone and call who you need to at the bank and find out where your loan is in the process. If something is wrong, find out what you can do to fix it. A lot of times this can get your file from that "to do" pile and into that "done" pile. Be persistent. Border the edge of annoying without crossing it.

Here's my story. I applied for a line of credit on Oct 26. Failed the first time, partners and my poor credit. (stupid us, we didn't check and thought all was right with our little credit world) Restructured our LLC, fixed our credit issues and filed again. Failed again. Our fixed credit didn't process. Found out why and filed a third time. Failed. Still didn't process. The bank was somehow regurgitating the same credit files. Went up the chain at the bank and filed a 4th time. Paperwork got put on the back burner, called and moved it to the front burner. Had the business agent at the bank making 2-3 calls per week plus emails. It had to go through a few bosses bosses, but finally yesterday March 13th and 8 dings later on my credit history (still worth it)we were approved for our line of credit. Better late then never. Was it frustrating, oh heck yeah, but persistence and patience paid off.
 

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