How to write the highest offer on an REO and lose!?

Are you writing offers on REO properties for your buyers!? Are you facing Multiple Offer situations!? Are you losing these deals?! Please read on.....

We listed an REO property in San Jose on August 1, 2008 which had some serious potential and thanks to our Gorilla Marketing with Craigs List we were able to generate a lot of interest. In 2 days we had 3 strong offers came from Realtors and I wrote one for one of my buyers as well.

Ironically the offer which captured the Asset Managers attention was not the one that had the highest price even though she countered BOTH of them. What became apparent to me was that most of us who have been writing offers for years; ASSUME that the person reviewing our offer is ALSO a California Realtor (or in the same State as you are) and knows exactly the significance of each CHECKED-BOX and CONTINGENCY that we are creating on the offers. Compounding the problem was the highest offer had conditions which did not lend themselves to the on-line portal that most of us use to enter these offers. In other words, I had to write a lot of explanations to communicate the nuances of this offer to the Asset Manager.

For instance the realtor with the higest offer was asking for 50% of Section 1 work which is typical in MOST offers we used to write in the OLD-WORD and not the New Realty! This creates un-certainty for the Asset Manager and they don't want to bother with the offer even though it's the highest price. Same goes for a precentage carry back on City and County Transfer taxes which when you think about is insane! The Asset Manager reviewing this offer is in Baltimore and the property is in San Jose!! How does he/she is expected to place a dollar value on this condition!?

I suspect that the challenge might be that the buyers are insisting on these conditions (because they bought their house 10 years ago with the same contingencies) and the realtor has no choice but the put them on the offer! However, we need to coach and educate our buyers that this will put their offer in an inferior situation. You are the one leading and owning the conversation with the listing agent not the buyer and you are the one who will be blamed not them!

The solution would be to get a strong estimate on the Section 1 repairs or any other carry back costs and then communicate that as a specific dollar mount which corresponds to what your client is requesting. That way, the Asset Manager knows a head of the time the risk they are taking with your offer.

I hope this help and would love to hear more if you have other examples.

David Mortaz, David@HomestretchCapital.com

www.HomestretchCapital.com

Who Knew Foreclsoures could result in TOYs-For-Kids!!

In a recent preview of one of our REOs, I came across some Toys that were left behind! It made me sad cause I have a 9 year old too and know how attached kids can get to their toys. So, I contacted the Asset Managers and got permission to remove the Toys to be donated to GoodWill.

They gladly agreed becuase in this case everyone is a winner. We avoid sending the toys to Landfills and some kids potentially could get toys they otherwise could NOT afford. And the lender could use this to get some positive PR. I am sure Al Gore would be proud, but charity begins at home and I am happy we were able to get something positive out of a difficult situation.

But what if everyone of us who offers REO Services did similar things?! What if before the TRASH-OUT services is ordered, we all made an extra phone call to get the Toys and other useable material OUT of the house to a charity. What if we recommended "Green" or "Recycled Products" in REO repairs that we come across daily? What if we cared about the impact we are having on this Earth?

What if!? After all, my 9 year old and the kids who lost their toys still have this Earth in common and I would like to leave it in much better shape that we found it.

Would appreciate any feedback and comments.

Does your REO Agent pass the SMELL Test?!

I recently was amazed at the shabby way our offer was handled by a well-branded Silicon Valley Real Estate company that I started thinking about why banks trust their precious REO listings to these incompetent agents!!? This agent claimed he had NOT seen my offer that I personally dropped at his office after meeting with him few minutes earlier the same day!! We met him at his office to drop off the offer which we did after discussing it with him. It sat in his in-box for 4 days and he was claiming he had not seen it!!

So, I am thinking there should be a "SMELL TEST" to distinguish an ordinary agent from the one's who will perform exceptionally. Specially since this guy has 30 active REO listing and 30 closes per month!! Hence, my attempt to identify Top 10 questions that REO Asset Mangers could pose to REO Agents before assigning their next REO. Drum roll, please....

1) What's the Marketing Plan for moving this REO!? Most REO Agents just post on MLS and forget about it. I was listing our REO condo in the CraigsList in Dubai and we were able to close in record 45 days!! This market calls for Gorilla Marketing since there is too much supply.

2) How many current REOs are you servicing? This agent claims 30 active REO listings, 25 in escrow and 30 closes per month! How does he prioritize them!?

3) How many people are working full time dedicated to REO listing and sales in your office!?

4) How many Open House you have held for your existing REO listings in the past month? Ask them to provide MLS output for the posted Open House scheduled.

5) Are you staging your vacant properties?! If not, why not!? I am amazed to find the condition of some of the REO listings and it's no wonder that City and County Organizations are now involved with these neighborhood plights.

6) Do you have a maintenance and property management team that's routinely managing these REO listings?

7) Do you have a billing system for submitting invoices to Asset Managers? Less time an agent spends on paperwork, more time they will have to market the REO listing?
8) Do you have lead capture system and are you communicating the REO listing to these leads? How often and how do you measure the success of these communications?

9) Can you provide References from the Asset Managers that were working with our on your previous REOs!? We can provide Asset Managers, their Assistants, Title reps......etc who enjoy working with us on REOs.

10) What motivates you?! Look for answers above and beyond MONEY cause this is a Channel business which requires a tag-team approach to get deals closed.

As the famous saying goes, "ask and you may receive"!