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Making Mutiple Offers On REO Properties. Risky or Practical?

Florida Foreclosures

Well my answer is easy.....practical. And here's why based on a real life example from this week.

REOs (foreclosures) in my area of Poinciana Florida make up 25% of the inventory of homes for sale but 60% of the closed transactions (last 90 days)!! What that means is that REOs are by far the best deals and are flying off the shelves. They also sell for 100% of the asking price.

The foreclosure market in Poinciana Florida is very, very competitive. Most of these foreclosures are being bought by Investors looking for good rental properties. On average they are able to buy a 3 bedroom 2 bath home with 1800 sq ft of living space and less than 10 years old.

These houses rent for $800 to $900 per month. And can be bought for an average of $64,000. If you do the math you'll see these are excellent investments.

Because these Poinciana properties are such great investments they are very hard to get under contract. It's a feeding frenzy of cash buyers looking for a deal. Taking the time to look at every property and then submitting offers on one house at a time is basically just a recipe for failure.

So......we have our Investors make offers on multiple properties at the same time. Usually sight unseen. The risk is in the timing. You have to make sure your buyer doesn't end up with more properties under contract than they want to purchase. Of course if they do they can always use the inspection contingency to get out of the deal. The  real risk is that you as an agent can ruin your reputation amongst your peers. You don't want to get a reputation as the agent who cancels deals.

To avoid this you have to be able to really monitor the negotiations and time perfectly when the buyer is going to withdraw their offer(s). It can be tricky but once you get the hang of it it's just a system like anything else in our business. These REO properties normally have multiple offers anyway so the seller is not left high and dry. They just negotiate one of their other offers.

This past week I used this technique with one of my investors. We made offers on 17 properties. The Investor wanted to buy 2. My timing was slightly off and they ended up with 3 accepted offers. After discussing this with my Investor their solution was to just go ahead and purchase all 3 of them!! I forgot to mention that benefit. Sometimes you end up with more. I like that.

So what do you think? Risky? Practical?

If you liked this article then you'll want to read these:

Buyers Making Multiple Offers. What the........................?

My Buyer only wants one house. Why make 14 offers?

 

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***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

The BIO for Bryant Tutas

 

 Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales,  Orlando Florida Short Sales, Celebration Florida Short Sales, Windermere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.

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Comment balloon 20 commentsBryant Tutas • December 11 2010 09:11AM
Making Mutiple Offers On REO Properties. Risky or Practical?
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