We have been noticing an interesting strategy which some buyers are using is to contract our REO property at huge discounts to the list price once they have it under contract!! These buyers are ordering inspections which in 95% of cases reveals more repair requirements. These buyer then request additional dollars towards these repairs and we are seeing complete compliance from our Asset Manager since they don't want to lose the buyer!! This results in huge deals.
Here's an an example that we saw work this past month!
1) Write an offer at $310,000 for a property listed for $359,900.
2) Get it coutner and contract at $325,000.
3) Order inspection and come up with $30,000 of repairs (not that hard to do with REO properties).
4) Amend offer price to $295,000 or request credit for repairs.
5) Close.
That more than $64,900 discount to the list price and goes a long way to cover debt service. With rents on the rise, this is a good strategy to acquire rental properties using REOs.
Do you think you can use such a stragey? Let us konw what you think!?
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