Hello DG Members,
On May 7, 2009, I started the following thread “Getting a bank to Finance an REO!”
This can be found at:
The old saying of patience is a virtue is so true. I posted my story starting on May 7th, and I remember it like yesterday. We were so pumped up from Dean’s Live Gain the Edge Event 09 that we were on a mission to get on the path to success and financial freedom. On the 4 hour flight home from Dean’s Edge event, my wife and I made an action plan list of everything we needed to do. My list included the following action item “contact at least 3 local banks and inquire about REOs”. Thus, that is exactly what I began to do.
I found a local area bank that had a 4 bedroom 2 full bath single family home with an attic, basement, fenced in yard and a two car garage. I looked at the property and drove away thinking about what Dean would do in this situation. The bank was motivated and the asset on their books was really a liability to the bank. Thus, I did some research and presented an offer requesting 100% bank financing and an additional request forthe bank to provide to me $10,000 in cash to complete cosmetic repairs. The bank was asking $120,000 for the home.
I did not provide a firm set offer amount to the bank. I stated that I wanted to create a win-win transaction for both parties and I could either offer a higher purchase price with great terms or a lower purchase price with good terms. The choice was up to the bank. I did not hear anything back until June 4th and the Bank President indicated he was busy and apologized for not returning my call earlier. They offered me the home for $115k with no additional $10,000 in cash for cosmetic work that I requested and an interest rate of 7.25%.
I fell off my chair thinking this deal may actually be 100% financed, but I still wanted the home to have a positive cash flow. I ran my own numbers comparing change in interest rate to purchase price and the amount that would be paid over time. Thus, I wanted a lower interest rate. I contacted the bank and expressed my gratitude for their counter offer but I still presented an argument about homes in the area, the sluggish economy and home sales, and a recap of the monthly expenses I believed the bank was paying each month to keep the REO home. I stated that I still wanted to create a win-win transaction for both parties and I could either offer a higher purchase price with great terms or a lower purchase price with good terms. The choice was up to the bank, but I was unable to offer a high purchase price with bad terms (high interest rate). Thus, I cut to the chase and stated if they would not provide the cash at closing for $10,000 for cosmetic repairs then I would only offer $94,000 with a rate close to the "prime rate" and I desired the rate to be fixed for at least 5 years and each 5 year block the rate would be tied to an amount slightly higher than the prime rate. The prime rate at the time was 3.25%. I also requested that my first payment would not be due to the bank until 60 days after closing because I wanted ample time to complete the cosmetic work and secure a renter for the property.
To my disbelief, that is exactly what we received. A purchase price of $94k (this amount with probably be $88k after the credit for property taxes) and a fixed interest rate of 4.5% for the first 5 years and the mortgage would be amortized over 30 years with the first payment due 60 days after closing. I still can not believe it! We are ordinary people achieving extraordinary things thanks to Dean Graziosi! His books, programs and website is what provided the knowledge, direction and inspiration we needed to succeed.
I want everyone to know that they can do this too! That is why I am providing the amount of detail to help you in your local area do the same type of deal! Dean, thank you for all your inspiring guidance and we really appreciate all the inspiring members on the DG website too! Good luck on all your deals! Believe and Achieve! - Joe and Stacey
"I am naive enough to think that I can do my part in helping change the world, and if that's a bad thing, then, so be it, the Question is....who's coming with me?"
- Dean Graziosi
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