Wholesaling Reo

11 Replies

Hello everyone,

I am new to the community and have been reading up on wholesaling REO homes. I am currently looking to wholesale homes located in the city of Detroit where property values are already low. There are many people looking to become home owners vs. renters and also many people looking to become landlords that are just unable to find the deals they desire.

Wholesaling homes will be a new adventure for myself and any advice will be greatly appreciated. I do understand that the market does not allow for much profit however even making a few thousand per deal would be a great start.

Please advise and thanks in advance for any help!

All of the foreclosures in my area are required to be sold through a Realtor on the MLS and by that point, there's no meat on the bone to wholesale. Let's not even address the fact that with the advent of auto-emails via the MLS, your buyers may already have Realtors beating you to the punch. Some foreclosures (i.e. HUD) actually prevent you from assigning contracts those contracts. HUD and some banks will actually require you to show proof of funds before they will consider your offer valid. Also, HUD homes are not allowed to be sold within a certain time frame (I think a 90 days, but double check) and allow you to make greater than a certain % profit (I think 10%-15%) without showing rehab receipts to justify the increase in sales price.

Regardless, cash buyers and flippers have the same access to REO's in my area as the wholesalers (sometimes better), therefore, in my area, it's not a profitable strategy for my business. You will need to do the research for your area to see if it will work for you.

Hi @Amanda Johnson ! Just to piggyback on what Jared said, there are lots of other ways to find deals to wholesale. Try absentee owners, probate, expired listings, FSBOs, or drive around a look for vacant houses (just to name a few). Good luck!

--Kirsten

@Amanda Johnson - Account Closed are basically correct. I am a combination investor/rehabber/landlord/Realtor. So, I am also one of those end-buyers that you might be looking to wholesale too, but I am also my own Realtor. I can find those REO deals on the MLS, go see them, and make an offer, before you can even get an appointment set up with your Realtor. I advise all newbies to become Realtors themselves if they plan to do anything at all on the MLS. There ARE deals there, but there's also competition. And right now, you are at a competitive disadvantage.

Also, welcome to BP. And don't let this dampen your enthusiasm. There's just better areas for a wholesaler to work. Let me know if I can help.

As @Bryan L. mentioned, DO NOT get discouraged. Ask 100 questions like the one you just asked. These questions are the ones that will prevent you from wasting your time and money on wasted efforts and will get you closer to finding your Real Estate niche. Welcome @Amanda Johnson !

By the way, why don't you show us your pearly whites and post a profile picture?

Hello,

Thanks everyone! Great feedback. I really appreciate it. I will continue reading so that hopefully I am soon able to find my real estate niche.

@Jared DeValk- I will definitely join the community properly and place a picture up soon :-)

@Amanda Johnson -

To expand on what @Kirsten Sitnick said, acquiring properties on the MLS will usually be where most of the competition is. Working directly with private sellers will normally be where the least competition is. Deal flow from listed properties is subject to factors outside of your control, namely inventory.

For these, and other reasons, you may want to consider marketing to sellers.

Hope that helps!

In other words, there is NO opportunity to "wholesale" off the MLS. Wholesaling ONLY works with non-MLS ("off-market") leads that you go generate via marketing, etc.

And REOs are owned by banks. You will never meet anyone as UNMOTIVATED as a bank employee. They don't care about a "deal" unless you want to pay their price. Here in DFW, REOs that are priced right sell in days. An REO on the market weeks later is always a pile of cr*p owned by a bank that wants WAAAAAAAY more than it is worth.

Medium wbh square logoDev Horn, We Buy Houses® | [email protected] | 877‑932‑8946 | http://webuyhouses.com/profile/arlington

@Dev Horn - You always say this. Have you ever tried making an offer on one of those over-priced REOs? And sometimes you have to counter offer with them 4 or 5 times. And sometimes your initial (and final) offers have to be 50% of the list price. They do actually sell that way some times. By the way, I have wholesaled MLS-listed REOs, but I actually bought them, got the deed and then sold them. One may have been a double-close, but I can't remember.

You can wholesale houses off the MLS ...I do.

But...I am an experienced real estate investor with a team of 2 real estate agents, 2 full time property acquisition personnel, 1 full time sales personnel and 2 full time VAs. We have a system for making offers on MLS-listed properties and we make literally, at least 100 offers everyday. And even with that, we only get 2 houses a month off the MLS. Luckily we have other sources, so we are at 4 houses a month.

So...others are correct - the MLS should be the last place for you to look for deals because there's way too much competition. To succeed, you need a system, a team and you have to make an insane number of offers.

Originally posted by @Bryan L. :
@Dev Horn - You always say this. Have you ever tried making an offer on one of those over-priced REOs? And sometimes you have to counter offer with them 4 or 5 times. And sometimes your initial (and final) offers have to be 50% of the list price. They do actually sell that way some times. By the way, I have wholesaled MLS-listed REOs, but I actually bought them, got the deed and then sold them. One may have been a double-close, but I can't remember.

YES. And I count the hours I've wasted on REOs here in DFW. But WHOLESALING off the MLS??? Maybe in TN, but I have never heard of anyone in a major market having any real success with that. Wholesaling works when you have a deal that NO ONE ELSE HAS. If it's on the MLS, what does a wholesaler do to add value to that? And at least here the REO listing agents require serious Proof of Funds to even get close to their bank clients with an offer. And last point, RE agents are wise to the whole assignment thing. If you don't have cash to buy REOs - at least in a major market like DFW (or LA, or Phoenix, or ...) which is crawling with "wholesalers" who just completed the latest guru course in the hotel down the street - DON'T WASTE YOUR TIME. To advise those guys to jump in the viper pit of bank-owned REOs is not thinking in their best interest, so I will not do it - to them OR the POOR AGENTS that will have to deal with their silliness.

Medium wbh square logoDev Horn, We Buy Houses® | [email protected] | 877‑932‑8946 | http://webuyhouses.com/profile/arlington

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you