making 20 offers today, what do i do about earnest money

Thankyou nelson, i know my thread was a bit thin on details, however i made about 20 offers today. My realtor was busting me saying " I hope your ready to write lots of checks" as it turned he only wanted one to copy and use if any of my offers get accepted. Anyway as it's my first time had a bit of panic this after noon even know I know thats all needed to do. I placed all my offers on REO's in RI 3 bed 2 bath SFR, all at 40% of listing price, i"m interested in what happens now. I also signed them all with my name and or assign, with clause of written refusal from the banks. Like I said being as this is first time it was rather daunting signing all those papers, but knowing that others here have done the same kept me going so DG family. One question, I have added a due dilligence regarding inspection of the property. If my offers get accpeted how do I go about the inspections, do the inspector get paid prior to the inspection or at closing and if I do back out how do I pay for the inspector without using my money??

Thanks again everyone.

Huw

Thanks Nelson I did put a clause in the contract stating subject to inspection and partner's approval. I did use POF, but I read a post on here by Anita and she says that she signs all of her contracts even REO's with and or assign and they get accpeted, And my realtor did say that they will probably be refused cos of the low offers 40% below the listing price all houses have been on the market over 90 days all have had 2 price changes in the past. I also put in the clause that all offers to have written refusal from the banks, something elase that I have read on here to do that way I know that the offers are being put through. By the way the state Im in is Rhode Island.

Huw

All of our Reo offers with and/or assigns have been refused so far, but some local bank reo's might allow it. As far as EM, we put in our contract that EM will be provided after offer acceptance and that has worked for us.

Thanks Sheila, I'm keeping an open mind if they get accepted excellent if not at least I have made a commitment, and then I can reall hit the ground running. The earnest money is to be provided after acceptance of offer, again thanks to all commenst so far.

Huw

Good for you for taking action! Forget what the Realtor said....he doesn't have a magic ball! 40% below LISTING price IS DOABLE! It's a numbers game! Correct as in some banks aren't accepting the and/or assigns BUT some are. Depending on how weighted their books are and especially submitted as a cash buyer, I think may sway their decisions. Once signed acceptance (speak as if you already have them:) you're gonna have to come with earnest of course. Just have your backups. You can pre-sale them with your buyers and have them pay your earnest money. Make sure to have your transitional funding in your pocket in case you have to do a double close. You can also search for "bulk REO buyers" and clean your plate in one big swoop. whoohoo! lol

(btw: do a search on Matt Larson's post regarding assigning contract. in one of his forums he gave a clause that could be acceptable other than 'and/or assigns'....I believe it was: "and/or financial partner" )......just a thought

Most will say: "it can't be done, those will get regected, it'll never happen". But what do they know...and who gives a rip what they say! lol PROVE them wrong! Just because they hold a license, wear a suit, smell good, look good.....doesn't mean they are experts! You keep taking action and pressing forward! The results WILL come!

Keep us posted!

God Bless!
Jen

Not sure what state most of you are in, but here in NY they are very strict when it comes to REO's

Most of my inventory over the last 3 months has been them and the banks, when you put in an offer want

Corporate docs
POF w bank statement with name of same bank no more than 30 days old

If in your name, same POF w bank statement protocol

You can present a copy of a check beofre you sign a contract, but at signing a certified check or check in the name of your atorney has to be presented with normally 10% down

Part of these procedures is to crack down on illegal flips, plus when you buy you have to hold for 90 days, so it cuts down on title and transfer tax issues.

Good luck

All you people are confusing me, I am sure you know what your talking about but it makes me wish RE wasn't such a serious game. I love doing this but I do want to work with people that are knowledgable. I think you all are and I hope all are successful. Keeping my ear to the ground for great deals and hope things turn out ok.

When Anita wrote that post ie:"she signs and/or assigns, even on REO's" that was a few years ago. Things have changed & they always continue to change. Going to your local REI meetings regularly & networking hard is my advice.
Also, The Free POF's from these transactional funding Co's have been long gone as well. Not going to cut it in most cases. Atleast in my area. They reject them!
But I just read Tammy just used Coastal Fundings POF & she closed the deal.
I have also had some banks wanting everything to match. Like the bank acct to match the buyer on the contract. It is a lot more strict out there & harder to get an offer accepted with the banks, if your not a real buyer with the funds & closing on deals.
Keep going though. I did the same thing as you a few years ago & it is a growing process & makes you stronger & determined.

how this all works out been following every step so positive encouragement to all

I am currently making 2 offers a day on REOs. 99.999% of the time the lender will not accept an offer with and/or assigns. Their contracts simply are NOT assignable. These banks know when and/or assigns is in there along with a bunch of contingencies that they are dealing with some one that is depending on someone else for the money to close! Banks have been around the block and they know what gurus teach and why! DO NOT put subject to partners approval on an REO offer! Standard inspection period only!

You MUST have proof of funds, a copy of an earnest money check(they are not cashed unless you sign the accepted contract so you can write 100 per day, they mean nothing until the contract is accepted and then you don't have to sign it!!)and no stupid contingencies or you are NOT going to get 99.999% of your offers accepted!!

Don't waste the realtors time by making 20 offers on properties that will go to the end buyer. You must know which properties to make those 20 offers on!

Michael Mangham
MD Home Acquisitions LLC

The action you are taking will help you gain the knowledge. Here in Ga. on my last few deals as a buyers broker (I am a licensed Real Estate Broker in Ga.) when the bank accepts the contract they will then send the listing agent their contract. You / the buyer has 48 hours to sign their contract and put up the earnest money. BUT, things change, some banks and asset managers do things a little differently and maybe you can get a accepted offer. I wish you the best. But what ever happens learn from it, get better and make the most of the knowledge you gained and then you will be ready to take more action.

Dan Hilsman

I've heard of some investors in Florida that are successfully wholesaling REOs. Don't know the exact contracts and terms they are using, or what banks they're buying from, but it seems that assigning REOs is do-able in some areas...

I will never understand how a realtor cannot understand this is a time and money losing situation. The amount of time to take to present 20-25 different properties to possibly the same amount of different agents and to only get one accepted offer and be happy with that is strange.

To each their own

Wholesaling REO's is done everyday all over the country. We are saying using the and/or assigns method is 99% out of the picture. My partner KimmyJ has posted on here several ways to wholesale REO's. You have to know your market because the REO wholesalers dried up here in SD. They tie up properties to high & can't get rid of them & when this happens over & over the Listing agents & banks see this as you've wasted there time.
IE: Since I'm connected to several Investors in my area, I get all the wholesale deals through my email. One property that I made an offer on was listed at 225k with an ARV of 300k. This property needed 50k in work & my offer & most other investors offers ranged from 170-190k. Well, I got the 1st email from a wholesaler who tied up the property at 215k & tried to wholesale it right back at asking? makes no sense. Then after he fell through, I get the 2nd email from another wholesaler who is trying to dump it at 200k. Once again, he failed & didn't know his numbers & it's back on the market. This happens over & over in my area.
By the way, the 1st wholesaler wasn't even from my area, & tried to give it an ARV of 335k instead of 290-305k that this area is now at. The comps he used were from summer & these numbers change on a consistent basis.
You have to know your area & what % Investors are buying at. So studying your market is so key to this business.
I see everyone on here just writing I offered 50% below asking. Does everyone really know if there area is a 50% factor? My area went from 65% in 08, to 70-75% in 09 & 75-80% in 2010 & now back to 70-73% of ARV, minus repairs right now.
I'm Just giving my opinion of what I have been through & see everyday & it can take more than just making offers but you do grow in the process of failing.

Unless you have the cash to pay on the spot or at worst at title clearing, but it just doesn't exist or is very rare.

I can't see a bank acceptin and having the contract tied up for 30 days and definitely not with a transactional funding letter and no legit form of readily available cash.

Guys thanks for all your comments, and like poeple have said it is a learning curve and numbers game, as matt larson stated the 25-1 ratio. My realtor and I are expecting all these to be rejected, but as I have requested written refusal from the banks it will be interesting to see what happens.
I am using POF letter from coastal funding, aswell as a possibility HML if one of these sweet deals comes through. As I have said the offers are at 40% of the listing price all properties that have been on the books for 90 days+. My goal is to see which banks I get response which will hopefully come with a name that I contact for future references, may work may not but I'll have to wait and see. I do have a number of buyers lined incase I can do double closing so I keeping my options open.

All these properties are in areas that are selling right now anywhere in the region 150-300k, I will keep you all posted.

Huw

Ask them for copies of their office listings and offer yours as well. Office listings generally are not on the MLS for a specific amount of time and are appealing to investors. Send them out to your investors as well to get quick sales and have them remember you.

Good luck and keep it up

Congrats to Huw for taking massive action!! You are going to be successful. Congrats to all contributing advise born of pain and experience. I'll be staying tuned.
Gena

thanks for the comments gena I appreciate it, also thanks for the tip elixbrown I will be doing that.

Huw

The illegal flips you speak of are acually mortage fraud. I would think that if a bank sees a contract and/or assign, they may think that any documents (pof) submitted may be fraudulent. This could be why many offers are rejected. A solution would be to have your investors on the ready with pof documents, but this would be very tricky because it would be YOU putting in the offer.
I agree and dont have a problem with holding onto a property for a set amount of time if i could get a delay in the mortage payment. That being said, i dont currently have money to put down but I am sure that i could find and investor to partner with that has funds available. If they are dipping into my profits i dont care because we all have to start somewhere. A good deal is a good deal.

Here is what I do.

I signed a check, and made it out for $1000 dollars. I then copied that check, and gave the copy to my Realtor, and I kept the original and voided it out. Every time I make an offer he makes a copy of 'the copy' and fills in the 'to' and the 'date' fields and submits that with my offer.
Been working this way for a few years...

Good Luck,
D

I actually get REO (non assignable contract every time) properties under contract using a real POF letter that applies directly to the property I am offering on and a copy of the earnest money check, When the offer is accepted I arrange a double closing with my buyer and make my "assignment fee" at closing.

When dealing directly with a homeowner/seller I use my own assignable purchase and sales contract and then assign my contract to my buyer using an assignment of contract contract. I take both contracts to my title company and close. The title company cuts me the check for my fee that is reflected in the HUD!
Both are totally legal and in no way illegal or fraud.

There are many ways to acquire property, the last strategy I would use is to get a mortgage!!

Good luck and get those properties under contract and flip them with none of your own money!!

Michael Mangham
MD Home Acquisitions LLC

If its a POF, it has to be confirmed that the cash is readily available at that very moment and not just to do a double closing.

Do your own due diligence because most home transactions are different and make sure your realtor knows for sure that a bank will accept a TF letter towards the offering and not waste your time if they don't; I had a fellow agent lose on a $650k sale because the bank asked for a bank statement or paper trail on where the deposits is coming from and the contract is theres.

And this after he all but guaranteed the offer would be accepted.