I have made several offers over the past few weeks and the three Fannie Mae properties have all had different requirements!

The only similarity between any of them has been the requirement of a 10% EMD.

Property #1

Offer was submitted with all required Realtor forms along with Proof of Funds and EMD.

After offer submitted they came back and asked for highest and best because they had multiple offers on the property.  I lost out because I was not willing to go higher than my predetermined amount.

Property #2

Offer was submitted with all required Realtor forms along with Proof of Funds and EMD. In addition I had to sign the 15 pages of addendum’s provided by Fannie Mae.

I am still waiting to hear back on this offer.  I do not expect them to accept my offer, rather I think I will go into negotiation.  I have my predetermined offer and I am not willing to go any higher.

Property #3

Offer was submitted with all required Realtor forms along with Proof of Funds and EMD.  No addendums were required but the Realtor has requested that I have a letter from my lender saying they will provide the funds.

This is a little bit of a strange situation.  I am buying the property into my LLC and the funds are coming from a separate business.  They have said that my proof of funds must match up with the buying LLC.  OR…I can get a letter from the business who is holding the funds saying that they will provide $X amount of funds for the purchase of 123 Street.

I am noticing that there are a ton of hurdles to jump through when offering on a Fannie Mae property.  Some are easier than other and all of them may require something a little different.  I am not sure why this is but it is a good learning experience and all I can do is learn and continue to make offers.

I already have my eye on several other properties and plan on continuing to make offers until I can get a few under contract.

The last two are still up in the air and I will keep you posted.

The point of this post is to let you see some of the differences that you may encounter while dealing with Fannie Mae owned properties.

Good Luck and Happy Investing!

Ross Treakle

I recently had the privilege of interviewing a good friend of mine by the name of Andy Heller.  Andy and his partner are 20+ year veterans of buying REO properties and they currently utilize three different methods for finding and purchasing.  Those three methods are buying directly from banks, buying from REO agents, and buying at auction.

Let’s first define REO property.  An REO is a property which has completed the foreclosure process and the primary lender has taken back control of the property after the last effort by the lender to sell at auction on the courthouse steps.  REO properties become bad assets on the banks books thus limiting their lending power and thus their power to make money.  Banks are in the business of lending money, not owning ral estate.

When you are buying REO properties directly from the bank, you will want to focus your efforts on smaller local banks than the larger national banks.  The key to buying from local banks is knowing the exact property you are interested in before contacting the bank.  You can find this out by following a property you are interested in through the foreclosure process which culminates in the failed auction.  When the auction has been completed, wait a day or two and then call up the bank and ask to speak to the REO agent.  Have your property address in hand and reference the property when speaking to the bank representative.  When taking this approach to locating REO’s you can often catch the bank before they have time to recruit an agent to assist in the sale, thus eliminating competition and selling costs for the bank.

The second and the most popular method of buying REO properties is to work with a specific type of real estate agent called an REO agent.  An REO agent is a real estate agent who has developed a relationship with the banks.  The banks then send the agent their REO properties when they become available and ask that the agent assist in selling the properties for a commission.  once you find an REO agent, you must build the relationship.  You will end up making several offers before getting the attention of the REO agent.  The agent most likely already has a handful of investors they work with and it will take time to crack into that group.  When you are contacting the agent, ask them to draw up the contract for you so they will be paid as both the sellers and buyers agent, thus doubling their commission.  Once you have the relationship, you also want to be sure to close on the properties you make offers on.  If you fail to close, you may alienate the agent and they may never choose to work with you again in the future.

The last method of buying REO properties that Andy Heller and his partner are currently using are auctions.  I am not talking about the courthouse auction, I am talking about an auction held by an official auction house.  WARNING: I would stay away from this method of you are just getting started.  In fact, I am not going to go into any detail on this technique.  If you are an active and seasoned investor, you are most likely already aware of this method.

These are the three methods that Andy and his partner use to buy REO properties at pennies on the dollar.  I recently made a class with Andy called the “Become an REO Expert” class which you can get your hands on for under $25!  You also get the “Learn to Lease Purchase” class and an interview with a real REO expert!

>>Become An REO Expert<<

Cheers,

~ Ross Treakle

This is the third installment of “The Foreclosure Process”.  We have already covered Pre-Foreclosure and Foreclosure, today we will cover Post-Foreclosure.

The term Post-Foreclosure is not something that you often hear real estate investors talking about.  You are more likely to hear the term REO or Real Estate Owned.  This refers to bank owned properties that have completed the foreclosure process which culminated in a failed courthouse step auction.

At courthouse step auctions, it is a fact that a majority of properties are not sold.  Sure a few properties are moved but the cash requirements and sheer volume of properties means that a majority of the homes at auction will be taken back by the lender.

Once the property is taken back by the lender, the property becomes a Post-Foreclosure which I will refer to from this point on as an REO.

There are a few ways to buy REO properties, I will cover two methods which make up probably 99% of REO properties sold.

The first method is to buy directly from the lender.  A quick note of caution…DO NOT try to buy directly from a national lender!  This method only works when buying from local banks.  If you tried to contact a national bank, you would probably never get in touch with the right person and your efforts will go unrewarded.  Conversely, if you know the right things to say when contacting a local bank, you may be able to purchase the REO directly from the lender.

When calling on your local bank you will want to know the exact property you are calling about.  If you just call and do not know any specifics, you will most likely never get past the gatekeeper.  You can find out the property details by following the property though the foreclosure process which again culminates in a failed auction and subscribing to any number of foreclosure listing services.

One thing to note about contacting the local lenders…if you contact them the day after the failed auction, you may be able to catch them before they even officially have the property in their computers as an REO.  This means that you will catch them before they have begun marketing the property or listed the property on the MLS.  This is huge because if the bank is motivated, you may be able to negotiate a bigger discount when buying because they have not had any of the expenses associated with selling the property on their own.

The second method to buying REO’s is to find, meet and network with your local REO Agent’s.  There are a handful of Realtors who focus on bank owned properties, I call them REO Agent’s.  These agents are very unique in the fact that they have taken the time to contact the national lenders.  They have built relationships and now those lenders in turn pass on their own REO properties to those agents.

When you are contacting the local banks, you might come across a bank that says that they only sell their REO properties through a real estate agent.  That person is an REO Agent and may very likely have REO properties from several lenders.  Over time you will learn who the REO agents are in your area and you will be able to go back to them over and over and over again.

That is one of the best things about investing in REO’s.  Once you have a relationship with a few REO Agents, you will be able to get deal after deal after deal.  The most important thing that you can do to grow a profitable relationship is to be able to actually close on the properties you attempt to buy.  If you say you are going to buy a property and then back down because you do not have the financing, you might have just blown your one chance to build a quality relation with your local REO Agent.

I hope this has given you a little insight into the world of the Post-Foreclosure.  I have created a very cheap and affordable recording called “Become an REO Expert”.  The website to advertise that program is not yet finished but you can get the REO program along with my “Learn To Lease Purchase” class by clicking the link below.

Here Is The Link

Cheers,

Ross Treakle