A Frustrating time this week…
July 3, 2009 at 1:19 am | Posted in Uncategorized | 10 CommentsCrap–I am not happy!
Today is Thursday, and since last Friday I have made 19 offers on REO properties…and I didn’t work Tuesday! So that means I have reviewed, studied, run comp reports, title profiles and gone to see 19 houses in four working days.
Unfortunatley, as of today, I have been informed that 15 of those 19 houses have gone to other buyers. I am still ‘in play’ on only four of them. I know buying houses is a sort of numbers game, but things here in the San Fernando Valley are just ridiculously competetive right now.
And just so you know, my offers are GOOD! They are not low-balls, and they are not weak offers. They are all cash with proof-of-funds and a high deposit amount (10-20%)….definitely strong enough to get the bank’s attention.
But I am not getting enough of their attention. As a matter of fact, to put it bluntly, I am getting blown out of the water for the most part. Here’s an example…
A house is listed for $235,000. I write an offer for $225,000. All cash. No contingencies except a routine inspection of the interior. $30,000 deposit. We get turned down because there are TWENTY other offers, and a handful of them (according to the listing agent) are OVER $300,000….that’s $65,000 over list price!
Don’t these banks know that I need to feed my family, and the only way I can do that is to buy and sell houses? How can I compete with someone who can pay 25-30% over asking price? The answer is I can’t.
So I guess things are rxtra hot in my neck of the woods… And actually we are seeing the same phenomenon in the Antelope Valley as well. I recently fixed up an ugly house there and sold it only two weeks after listing it–Full Price.
The market is very good for sellers right now IF the house is listed at the correct price. And the list prices on bank-owned (REO) houses are for the most part very good for the end-use buyers (people who want to buy the house to live in, or investors who want to buy and hold).
For us ‘flippers’, we need to continue writing a lot of offers, continue to make the right connections, and branch out into other areas if necessary. We still need a reasonable discount so we can make money after the repairs or remodel are completed.
So the long and short of this today’s blog is….SEND ME SOME DEALS! lol…
Have a great 4th of July everyone and thanks for taking time to read my blog.
Dave Berens
10 Comments »
RSS feed for comments on this post. TrackBack URI
Leave a Reply
Blog at WordPress.com. | Theme: Pool by Borja Fernandez.
Entries and comments feeds.
Thanks Dave for answering my questions! I was going ask you if you were experiencing the same thing as us: getting our offers blown out of the water by other investors! It is rather frustrating! But like Napoleon Hill says, “A quitter never wins and a winner never quits.” So I have to hang in there and know that we’re only two feet from gold!
Comment by Marguerite— July 3, 2009 #
Hi Marguerite-
Doesn’t the story say we are ‘two feet from diamonds’? lol…I love that story and it’s so true. Keep on working it and good things will happen. If you do find something fun to work on, let me know—I need to buy a house next week!
Thanks for the reply-
Dave
Comment by daveberens— July 3, 2009 #
Dave, why are you taking the time (and toil) of going to see the properties before you make an offer if your offer is contingent on a routine inspection of the interior, anyway? Isn’t your time better spent increasing the number of offers to far more than 20 per week and viewing the properties on Google Earth before you physically see them?
Comment by SoCalGal— July 3, 2009 #
Hi Cathy-
I do make ‘blind’ offers as well, but only in neighborhoods that I know real well. There have been occasssions where I’ve had offers accepted on properties that I viewed after the acceptance and decided to pass. That makes the Realtor and the Asset Manager unhappy and tarnishes your reputation. If you write and get an offer accpeted, you better buy the darn thing unless there is something really wrong with it. Thanks for reading and I’ll talk to you soon!
Dave
Comment by daveberens— July 3, 2009 #
Dave,
I missed your webinar about owner financing. I shouldn’t have as a partner and I have just launched a site devoted to marketing owner financed RE all over the county. I am surprised at how “hot” the market is from your experience of late. I guess banks are approving loans.
Comment by Tom— July 3, 2009 #
Hi Tom-
I do think the banks are approving more loans than they were a couple of months ago, but that’s not our competition for the most part. The competition is coming from other very strong cash buyers.
I’d love to talk owner financing whenever you like. Write or call and tell me what you guys are doing.
thanks,
Dave
Comment by daveberens— July 3, 2009 #
The competition is ridiculous many areas of CA and out West. You have to overpay to get deals and the cash flow stinks compared to areas in other regions like the MidWest. Most of the competition is from speculators. It is a numbers game. What makes CA real estate so great? Is it because every else wants it and 95% of people are followers? Isn’t that how many investors got burned speculating when the market was hot? Don’t the most successful investors do the exact opposite of the masses? Why not try a different state where you can cherry pick properties with tremendous cash flow, tremendous equity and multiple exit strategies?
Comment by Ryan Moeller— July 3, 2009 #
Hi Ryan-
Out of state is still viable for sure. I just bought and flipped two fourplexes in Ohio six weeks ago. But my main focus is in California. Prices are good, compettition is fierce and we are having fun! The Cali opportunites will be here for a while, and muti-family opps are just starting to become visible. Stay tuned….
Thanks for the reply and hope you are well,
Dave
Comment by daveberens— July 3, 2009 #
Knowing what I know and have experienced with banks, MOST REO’s are going to be a complete waste of your time. Banks price them low to start a “bidding war” as you are experiencing, and in the end, take the highest and best offer (why do you think most make you wait several days for an answer to your offer). If you are only bidding on REO property, you are going to continue to have a long and frustrating summer. Still best to market, and, be in direct contact with, the homeowners and NOT an REO department. I have access to lists of owners that are 30 and 60 days late ont heir mortgages, you cuold go after estate sales, etc., lots of better (and more productive) uses of your offer writing time
To your success, sincerely,
Ben Benita – Prosfessional Short Sale Specialist
http://www.United-IG.com
Comment by Ben— July 4, 2009 #
Hi Ben-
In what part of the country are you? I have purchased REO’s for the past two years with great success. I also do business with homeowners, but that part of my business has fallen, because (I feel) most owners who have equity in today’s market are not motivated to sell at these prices. We do work lists as well, but the ‘late’ list gives us mostly homeowners with no equity who are already facing foreclosure. I welcome your feedback.
Thanks,
Dave
(by the way, I have picked up two REO duplexes in Los Angeles in the last week!)
Comment by daveberens— July 21, 2009 #