Bank deals are different than private seller deals.
Banks scrutinize your offer much more closelyâŠ but there is good news!
THERE ARE A TON OF REO DEALS AVAILABLE IN TODAYâS MARKET FOR YOU TO MAKE REAL ESTATE OFFERS ON!
Banks (specifically âREOâ departments) do a lot of deals. They are in the trenches every day and get âblown offâ all the time.
Because of this they are systematic in their approachâŠ
Their âBS metersâ are finely tunedâŠ
You are not going to get away with anything.
You MUST do a double closing because they forbid contract assignments, whereas in a private seller deal, you should do an assignment and avoid a double closing.
Banks want YOU to close
A private seller doesnât care who closes, as long as it closes under the terms initially agreed upon.
So when you are submitting an offer on a house to a bank, there are some differences.
The vast majority of banks will rely on their broker to list, negotiate, and manage the sale of the houseâŠ any red flags you raise in their mind, and you are toast.
You Must Play by the Brokerâs Rules
I get calls and emails on a regular basis from brokers whoâve received an offer on a property from one of my clients (like you) whoâs using my proof of funds and transactional funding. They call me skeptical that the money is really available for my clientâŠ so I quickly send them a bank statement, and when they see the proof their guard goes down.
I hear stories all the time about ânewbieâ investors who are doing it wrong. They use the wrong contract, they use too many contingencies, they call âpre-approvedâ offers âcashâ offers, and so on.
Take a guess at what a broker does with your house offers when they sense that a ânewbieâ is presenting it?
If you guessedâŠ âTHROW IT AWAYâ âŠ you would be right!!!
They are experts at the âsniff testâ. They get investors making offers on property day in and day out: who make exorbitant claims, but cannot back them up.
This is actually good news for you!
While the majority of investors are doing this the wrong wayâŠ you can do it the right way and whip your competition.
You can be new to Real Estate investing, and still look and act like a pro.
How? Follow my lead. I have been doing this a long time and in this article, I am going to show you exactly what to do when making offers on houses that are âbank ownedâ.
These rules are unique to bank deals because private sellers donât think about these things… they are not “in the trenches” every day.
8 Simple Rules for Making Offers on Houses That Are “Bank-Owned”
- Offer Earnest Money
Offer at least $500. The more you put up, the more real you lookâŠ especially if you have no contingencies. Usually 1-3% of the purchase price is the agreed upon earnest money deposit.
- Be Careful With Contingencies
Use as few contingencies as possible. I always include a title search as a contingency, however. Every buyer should do that, on every deal. This is customary. This tells you that there are no outstanding debts, judgments, or âcloudsâ on the title. The rest (home inspection, partner approval, etc.) are frowned upon and make you look like a ânewbieâ.
- Use THEIR Contract
Brokers want you to use THEIR form, not yours. If you make it easy on the broker and they like you, they may have other deals around the corner for you. And donât ask them to send their blank contract to you. This makes you look like you have never done a deal. You should look for the local Realtor Board Contract online and send it along with your “proof of funds” on your first offer to buy. And if you are a little nervous about using a big contract like this, I have created a training program called âThe Purchase & Sale Agreement Line by Lineâ to help you understand it. You can find more information at CameronDirect.com.
- Make Sure You Have Proof of Funds
If you canât prove your ability to close, the broker will not submit your offer to the bank. They are the gatekeeper for the bank and everyone is busy.
You need to include âVerifiable Proof of Fundsâ with your offer; which tells them that you are able to do, what your offer says you can do.
If you have cash in your bank, in a retirement account, or any other place, print up your most recent statement, âblack outâ your sensitive info, and then include that with the offer to buy the house. This is what a broker is hoping to see.
If you do not have the cash, then you will need to line up some funding. If you would prefer to find local private lenders who will give you a great rate, you can find known private lenders in your area, and all across the USA using my Private Lender Data Feed.
Or, if you are limited on time, you may want to check out my REI Trifecta Program where I will provide you with funding (and everything else you need to make quick cash).
- Shoot For A 30-Day Closing
Some banks vary a little, but 30 days is the sweet spot. Banks want to know that you can close quickly (while giving them enough time to get their âducks in a rowâ). They use systems to make the process easier for them to dispose of their REO properties. Make an offer for 30 days, but be flexible in case they ask for something different.
- Expect Addendums
Each bank has their own set of rules. The best way to make an offer on a house is by using the local Real Estate Board approved contract because that makes the broker happy. But, that doesnât mean that the bank is satisfied. They have processed thousands of these transactions and they know what is important to them and what is not.
So they have created their own contract which rides along with and supersedes your contract. This is what is known as an âaddendumâ. This is especially true when you are dealing with a major bank like âBank of Americaâ or âChaseâ. They are lending and foreclosing all around the country, and they are getting offers from investors in all 50 states. Each state has several Board(s) of Realtors which means there are hundreds of different contracts.
The asset manager does not have time to read through each of them to make sure that there is no sneaky or otherwise unwanted language. So, they created their own addendum form and tell you that you have to abide by it, or they will find another buyer who will.
READ THE ADDENDUM! Then if thereâs any question about what it says, ask the Real Estate Agent for clarification.
- Youâll Be Buying The Property âAs-Isâ
Banks will not make repairs after you get a deal with them. Their addendum will make you purchase the property âas-isâ. I wanted you to be aware before you submit an offer on a house though, because I have seen many investors attempt to re-negotiate with the bank after a few days of putting the property under contract. That wonât fly! Include some margin in your offers in case you find something âbehind the wallsâ, etc. after closing. If you are wholesaling the property, you donât need to be exact on repair estimates anyways.
- Avoid Using âAnd/or Assignsâ
Using “and/or assigns” is the fastest way to show the broker that you are ânewâ. In private seller deals, you would ordinarily include language in the contract that allows you to assign it. In bank deals, itâs a BIG âNO-NOâ!
When youâre wholesaling you have to do a âdouble-closingâ for foreclosure properties. You will incur extra closing costs, but the margins on bank deals make it worth it! Plus, if youâre using my âno feeâ transactional funding, those costs are greatly reduced.
Just be sure you are making offers according to my formula and you will be good to go. But whatever you do… do not attempt to make the contract âassignableâ. Rather, plan to close on the property in the name of your entity and sell it same day to your cash buyer.
Take a peek belowâŠ and learn how to get access to my funds so you can do more deals.
Now that you are aware of these 8 rules, you will be making offers on a house like a pro and you wonât make the same mistakes that most investors make when learning how to deal with each type of seller.
Private sellers tend to believe whatever you sayâŠ banks tend NOT to believe whatever you say. You need to PROVE it!!!
If you donât have the ability to prove it, let me give you the abilityâŠ
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