Huge Apartment REO Secrets

At this time I would like to share 3 secrets you BY NO MEANS identified about large apartment REOs:

Secret #1:

Banks are able to hold apartment REO assets on their books for a time of up to five years.

Secret #2:

Not all apartment REO assets are retailed for super cheap simply because they are REOs.

Secret #3:

Asset managers will not want to work with you.

You most likely have a slight understanding of single family REOs and how they function. Commercial REOs have little to nothing in common with residential REOs. An asset manager for an REO division is usually in control of a bunch of properties at a one period. A commercial division REO asset manager is in control of a certain area, an asset type, a loan type or a mixture of everything. Since the assets they are handling are further operationally extreme, they handle a far smaller amount of properties. This means they normally will be familiar with their assets closely. Don’t forget, they are not a production line (like a residential asset manager), but are actually working with specialty products that are distinctive. Therefore, you’ll want to approach them in a different way as well.

This is what you ought to know about banks. Since banks are seriously controlled, given the current economic atmosphere, and being that bank regulators are observing all transactions very carefully, this means that you most likely won’t be receiving many deals from them or asset managers. It is the job of the bank to demonstrate that they are making every single effort to get the maximum payback on every REO they sell. (I know it doesn’t always seem like it) The smartest way for them to do this is to take the property to market (using a r/e broker) and perceive how much the marketplace (you and I) is prepared to pay for that property. This means, if there is ever a watchdog auditing a reduced sale price of an REO property, they can respond by saying they did all they could to sell the property. The price was purely what the market said the property was valued at.

There are a few allowances, of course. One is if the bank is a minor local bank, it might sell some of their REOs to local investors they have solid connections with. There’s that word “connection” again people!

Banks might also be eager to sell their “bad loans”, loans that they refer to as “non-performing” loans to investors that can achieve. This relieves the bank of going through the total procedure of foreclosure on a property they want nothing to do with. Essentially, the buyer of the loan would turn into the new note holder of the property, giving him privileges to foreclose and taking physical control of the property.

If you are located in an area or know of an area where a bank is holding a collection of commercial REOs, to come to be an “insider”, performing a little investigative work could pay off majorly. Discover what agents they are using to liquidate their properties and shape a connection with those agents. Likewise, learn the sales prices and the properties that they have sold to figure out their hot knobs. What made the lender sell one property for a smaller amount than an alternative property? Different banks are scared of different concerns you’ll notice. By figuring out what those conditions are, it will aid you in negotiating improved deals.