REO Wholesaling FAQ

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I’ve been in the REO wholesaling arena for several years now, and as a result, have received many emails from aspiring wholesalers who have questions about the process of flipping bank owned properties.  Following are answers to some of the most frequently asked questions that I have received about REO wholesaling.

  • Can I add “and or assigns” after my name on the purchase contract and then assign it to my end buyer?

No!   The majority of the bank’s addenda will include verbiage that prohibits you from assigning your purchase contract. There are several ways around this, however, which I have detailed in a 5 part series that you can read here.

  • Do I need an earnest money deposit when making an offer on an REO?

Yes!   When making offers on REO properties, you will need an earnest money deposit to submit with your offer.   $500-$1000 will usually suffice, although some of the banks will ask for more.  Offering a large earnest money deposit is a great way to make your offer stand out, so if you have the funds available and you want to get the bank’s attention- offer a big deposit!

  • Do you tell the listing agent that you are wholesaling the property?

I don’t recommend telling the listing agents that you plan on wholesaling the property once you have it under contract. Just make sure to honor the contract that you signed and get the deal to the closing table. It is not necessary to divulge the details of the second transaction to the listing agent.

  • If I put an REO property under contract and can’t find a buyer, can I just back out using my inspection contingency?

Yes, you can do that, but it’s not something I recommend.  If you sign your name on the contract, then you should be prepared to follow through whether your buyer backs out or not.  If you make a habit of putting properties under contract and then backing out of them, you will develop a bad reputation with the REO agents in short order, and your offers will soon find their way to the round file.

  • Once I have an REO under contract and am marketing it to end buyers, what should I say when they ask me if I own the property?

Tell them the truth- that you have the property under contract and will be purchasing it from the bank on the same day that you are selling it to them.  There’s nothing wrong with what you are doing, so there’s no need to lie!

Hopefully this article finds it’s way to those of you who are interested in wholesaling REO properties.  If you have further questions about the REO wholesaling process,  feel free to post them in the comments section and I’d be happy to answer them for you!

Photo: Laura K. Gibbs

About Author

Formerly a bartender, Steph Davis is now a full time wholesaler in Tampa, FL. If you'd like to get an idea of what it's really like out there in the trenches, head on over to her blog:!


  1. Never dealt with a REO Flip. I want to do a deal with a fellow wholesaler and he just got a REO property under contract 12/09/09 . He doesnt have any buyers at this time and the property is 50% ARV 12 K cosmetic rehab from my inspection and price. My question is how can he assign me his contract (from reading REO’s are much different). I have a buyer ready but I would much rather get my wholesaler fee instead of a referral fee if possible.

    thank you JeVon C.

  2. For me personally, I don’t put anything under contract unless I am 99.9999999999% sure I can sell it. I know my end buyers well, and I know exactly what each one is looking for in a deal (I don’t have a huge buyers list, I just concentrate on a handful of active cash buyers at a time). Many times I will call them up and run the numbers by them while I am still negotiating with the bank/seller to see if it is something they would be interested in.

    I have back up funding in place (a private investor) in the event I can’t find an end buyer, but I’ve only had to use it once when my end buyer backed out of a deal the day of closing.

    Not sure if that answered your question….

    .-= Stephani´s last blog ..Deals and Toastmasters. And Stuff. =-.

  3. Who is involved in wholesaling and REO?
    I’m trying to distinguish if there will be two agents (buying and selling) or is it just a one agent process.

    I don’t have money to put down on an REO. Are there any way i can use my end buyers cash to secure the property and still pull a fee from the deal?

    There is a property I’m interested in but it’s not listed yet. I’ve driven by the property and it even looks like someone is occupying it. I’ve done mortgage records searches and it seems as tho a bank owns it because they are the last owners on the mortgage. Should I contact a title company to do a search?

  4. clifton walker

    1) so while your negotiating price with the seller, you’re simultaneously negotiating with the end buyer to make sure that you offer the right price to seller BEFORE you put it under contract?
    2) how does the private investor differ from the end buyer? dont they both do the same thing- Buy Properties
    3) how can you use your inspection contingency to back out of a deal if the inspection report doesnt show anything that you already were aware of?

  5. Richard Wilmoth

    Hi Steph wow very interesting article I never knew that wholesalers could put bank owned properties under contract and wholesale them I thought that to do this one would have to purchase the REO themselves with cash then find a buyer to flip it to. I am interested in wholesaling REOs tho but just how do I get started in this do I go to the banks and directly ask for properties that did not sell at an auction?

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