Making offers on foreclosed properties can sometimes be a daunting task even for seasoned real estate agents and investors. Each bank can required different and very specific requirements that must be submitted before they even look at your offer. Recently, we have been seeing multiple offers on these homes and above asking price offers on many REO (bank owned) properties. Here are some tips and tricks that we have learned to get our offers accepted:

• Pay cash-REO banks love cash buyers. Although this may appear impossible for you to do, see if can move some equity or money around to make it happen. Alternatively, see if your bank will give you a line of credit against another property so you can write a check for the purchase of this new property.
• Offer to close in 2 weeks-This requires either a cash offer or a very organized mortgage broker to make this happen. Truthfully, I often find that it is the REO bank that can not close that quickly because the title work on a foreclosed home can be difficult.
• Remove the inspection contingency-Only do this if you are confident about your analysis prior to making your offer. Alternatively, many banks will give you a verbal acceptance one day and then require you submit your earnest money check and their bank docs within 48 hours. You can use that window to do your property inspection and then not turn the docs in if you need to cancel. Although this not the most professional way to handle yourself, it could prevent you from buying a problem that you did not see when you did your walk-thru.
• Make sure to use a reputable investment real estate agent-Surprisingly, the number of REO agents in Minnesota is actually quite small. Although they don’t have much if any influence over the bank’s decision, they may be willing to give you useful advice that may help you win an acceptable offer. I found that I had to earn the respect of the big REO agents before they would talk to me.
• Do not ask for seller paid closing costs-Banks just look at the net offer. To them a $100k offer with $5k in closing costs is the same as $95k offer with $0 closing costs. In fact, they feel that paying closing costs can just complicate the transaction.
• Do not ask for the bank to perform any repairs-They will almost never pay for any repairs or changes to the property. They are selling it as-is. Just factor that work into your offer price.
• Do not put any time limitations on when you need a response from the bank. The banks are on their own time table. They will do what they want to do, when they want to do it.
• Refrain from any other non-standard language or requests on the purchase agreement which may include: assigns to, access prior to closing, repairs, etc.

Although this is not an exhaustive list of foreclosure buying tips, just using the main ones will help you win more offers. Gosh, on second thought, maybe you will be competing with me and I shouldn’t have told you my secrets! I guess in this market, sadly, there are enough foreclosed properties to go around!

Are you searching for investment properties on your own and frustrated at your results?

Our last Investment Property 201 seminar in July was a huge success.  It was standing room only!

Our next IP 201 seminar will be Tuesday, August 29, 6:30.

We are still arguing amongst ourselves about an encore topic that will be as popular as the llcs and liability shields.  If you have a request, leave a note in the reply box at the bottom.  Who knows, your request may be the next topic!

Scott

Community Crime Prevention/SAFE of the Minneapolis Police Department and Minneapolis Housing Inspections are providing this workshop. Attending the workshop provides owners and managers with valuable information, resources and opportunities to network with other property owners. Workshop topics:

• The ABCs of property management
• Working with the Minneapolis Police Department
• Working with Housing Inspections
• Tenant behavior issues
• The risk of lead poisoning
• Hennepin County Housing Court / mediation
• Networking opportunities

Cost: $20.00 — checks payable to City of Minneapolis (Includes cost of workshop, materials, DVD on Hennepin County Housing Court, and box meal.)

Pre-registration is required. RSVP by Thursday, October 16, 2008. (registration limited to 100 participants). REGISTRATION AFTER OCT. 16 WILL BE $30.

Return the registration form (PDF) and $20.00 check payable to the City of Minneapolis by Thursday, October 16, 2008 to:

RPOW
Community Crime Prevention/SAFE
4119 Dupont Ave. N.
Minneapolis, MN 55412
Questions? E-mail ccpsafe@ci.minneapolis.mn.us or call the message line at 612-673-2812.

Numbers were recently released that show that violent crime in Minneapolis and specifically North Minneapolis dropped 14% and 17% respectively. As much as I would like to attribute all of that to good investors and good landlords buying North Minneapolis properties to clean up the foreclosure mess, I don’t think we can claim complete credit. But I do believe it helps!

Read the full KARE 11 article here.

If you like reading about big real estate investment (like buying the World Trade Center) and investors (like Donald Trump), the post written at Mortgage Calculator might be right up your alley. They have chosen their “Top 8 Worst Real Estate Investments on Record“. It is a fascinating account of real estate deals from famous (Bugsy Siegel-The Flamingo in Las Vegas), to the bizarre (selling real estate on the moon).

Are you looking for Minnesota Investment Properties, but just can’t find a site that has MLS tools and features designed for investment properties? There really are no other websites in cyberspace dedicated to browsing the Minnesota MLS for just investment real estate.

I have recently just launched such a site at www.mnirea.com. The search capabilities are top notch and comparable to any that you will find on other real estate sites. The best part is that I have pre-loaded some common searches. Go ahead and browse the Minnesota MLS here.