Many national banks see their fates turning. Recently, many banks reported profits. These profits can be attributed to the extremely low borrowing rate and their ability to increase fees. Many of these banks still face the real estate hurdle. All of their balance sheets hold some mortgages that are likely to go into default at some point. Each bank tailors their own strategy for dealing with distressed properties, but a smart investor can gain access to these properties by knowing the right people and the right process.
Bulk Sales
Most banks have a wholesale division that specializes in the bulk sale of mortgages or owned property. Finding someone in this division is a great start to gaining access to the vast bank owned real estate portfolio. The easiest way to find this division is to start at the company website. It is also helpful to have an investment area or even a specific property or group of properties in mind.
When first contacting a person at the bank, be direct and have specific parameters in mind. Remember, bulk sales or wholesale departments deal in fairly large dollar amounts, think $10 million and up. It can also be helpful to have a real estate resume or a list of transactions previously completed to show the bank that a transaction can really occur here. Always try to build a relationship because even if the wrong person answers the phone, they may be able to look up the right person in a matter of seconds. Never get frustrated and never be rude or condescending.
Auctions
Many banks resort to auctions to move their worst properties. While this may or may not be a great place to find a specific property, it will certainly be a great place to meet the right people.
Auctions typically require a bank check to even enter the bidding. Even if an investor doesn’t plan on bidding on any properties, simply showing up to the auction and meeting people lets them know that investor has capital and is a serious real estate investor. Many times properties will not sell at auction, but it will be possible to get the contact information of the auctioneer to continue negotiations. Use this contact to find the right people that represent bank owned or defaulted properties.
Large institutional banks can be very challenging to deal with. Often it takes persistence and a little bit of luck to simply find the right people. An investor should be prepared for that faithful moment with a specific list of the type of properties he/she invests in and a list of previous transactions invested in.
Michael Cook - Michael Cook is currently a Real Estate Investment Banker for Wachovia. He and his partnerstarted their own real estate investment ...
