How would you wholesale a REO?

Question

I found a nice 2bedroom 2bath condo in southern california that is listed at 65% below market value, & would like to either bird dog or wholesale the property if possible, Im just not sure where to start with a REO.

Thanks in Advanced

Account Closed · Answer

In theory this can work.

A smart lender will still want to see the cash for the deposit, etc.

If the deal is a good one and you want to get more than a simple fee for a lead (selling information) you will need to see how far you can push things with the lender. Double close, an assignment, a purchase by an LLC that you sell a piece of or sell all of it.

Banks selling REOs want a clean sale. Cash is best. After than things start to get messy unless the bank really has a problem property.

Morgan Watkins · Answer

I remember some guy a while back saying that you can get the home under contract from a bank under an llc and then immediately sell the llc to the buyer. That way the house is still under the same entity (llc) and the contract is never really assigned to anybody. Ive never done it that way, but it makes sense. Maybe someone can relate to this technique.

Tom C · Answer

I not sure how you would do a double close with a bank. So far the dealings that I have had with the bank has been their way only. Which meant their title company and closing agent. The only communication that was permitted between myself and the closing agent was to discuss the meeting time and place, which could not be my home.

I wanted to use my title company, but the bank refused and said that it would only complicate and make the closing more costly.

So how would a person communicate a double closing to a title company who is working for the bank and will not communicate with the buyer?

Jon Holdman · Answer

You can double close.  Get a contract with the bank to purchase the REO.  You will probably have to show proof of funds before they will accept your offer.

Then, find your buyer, and get a contract to sell the property to you new buyer at a slightly higher price.  Higher enough to cover any costs you have associated with the double closing and your profit.

Then, both closings occur at the same time.  The money from the second transaction (you selling) covers the first transaction (you buying.)

Your buyer will need to be a cash buyer or using hard money or some other source of funds that aren't concerned about seasoning.  If they are using conventional financing, its very likely the lender will notice at some point that you are not on title for the property and will kill the transaction.

You can try just birddogging it.  But, since its listed on the MLS, it already has a lot of visibility.

Jon

Tom C · Answer

To bird dog, now that you have found the property tell an investor and get your payment. To wholesale it, put it under contract, then after you close the deal, sell it. In most cases you will not be able to assign the contract to a investor. So most likely you will have to close the deal. Which is fine, because the bank will pay most if not all closing cost.

John Rodgers · Answer

Yeah thats the thing I have no money to put down, and I'm pretty sure I would have to put some money down right. Guess I can bird dog the property then, Thanks for the reply.

Account Closed · Answer

Why can't he wholesale the REO? The bank won't agree to the assignment?