“We just want to give you one of our smaller deals first. You know, so we can see what you can do.” – Every New Client Ever

Yes, an understandable sentiment from a financial institution looking to get best execution on an REO sale.  Of course, the devil is in the details.

The Setup

Rhenium Capital gets our clients top dollar, and we have the NPL and REO case studies and scars to prove it.  Still, when engaging a new client it is perfectly understandable that there may be some reservations during the courtship process.  Yes, tough first REO deals are a great proving ground, and then there was THIS deal in the beautiful state of North Carolina:

  • Town of less than 3,000 people? Check.
  • Long term vacant property with structural issues? Roger that.
  • Depressed market with significant vacancy? Sho nuff.
  • Long term stale listing (3 years!!!) prior to our marketing agreement? Bingo!

The Results

Despite these headwinds, we actually had a successful marketing period, receiving 4 all-cash offers with relatively quick closing periods.  Of course, THIS is when the “fun” began.

  1. The initial top REO buyer had an unfortunate car accident, and could not fly across the country to inspect the asset.
  2. Buyer #2? He drove the property and opted for the, “Bro, you didn’t tell me it was vacant REO!” technique in the fine art of re-trading.
  3. REO Buyer Three decided that he needed a 90 day closing period for an “all-cash” transaction.
  4. And of course, our fourth buyer’s truck broke down before he even made it out of the state of Florida enroute to his inspection. He opted to withdraw.

Contracts and Obits

As a result, we were left with a disappointed seller and a lack of prospects, but winners never quit, and quitters never win.  After some scrambling and a 2nd effort, we found a local REO investor, went under contract and pushed toward the closing.

Then… this buyer unexpectedly passed away a day before the due diligence period expiration.

Yes, the obituary was confirmed.

So, on to the third effort, we reached back out to the buyer with the truck problems.  He was still interested, but…

 

Hurricane Florence

Yes, another tough closing for Rhenium affected by a hurricane. It didn’t help the cause that the property was 200 feet south of a river.

Luckily, the property made it through the storm unscathed.

Buyer/Seller/Everyone Fatigue

At this point, the seller was ready to sell, come hell or… high water.  The buyer was also ready to buy.  So much so that he offered a bit of a discount on his purchase price to buy site unseen. After some iPhone photos proved that the property wasn’t washed away.

The seller accepted, and with a great effort from the folks at Novare, 5 days later we are officially CLOSED.

So…

The deal was probably the toughest sale we have ever done.  It wasn’t pretty, it wasn’t easy and it was cursed with misfortune, but it is CLOSED.  We now have a happy lender client who can re-deploy the cash into a new deal, an REO investor who got a great buy & will do his part in revitalizing a small town, and another successful REO transaction for Rhenium Capital.

So banks, asset managers and servicers, bring on the next REO (or NPL)! 🙂