How to contract and wholesale an REO

[Account Closed]

ok everyone is saying that wholesaling takes little to no money to do. Im finding this to be a very erroneous statement. I live in a city where everyone uses an agent- there is no such thing as FSBO. Im am finding many bargain REOs/other properties out there but they are tied to an agent. If I wish to make an offer on a property, I am being asked to put down about $1000 in earnest money in addition to proof of funds. Well lets say I dont have a proof of funds- After all I want to assign this to another investor not purchase the property. In addition I have to give them $1000 just to get into a contract. For the gurus saying you can give $10 earnest money and lock a deal with them, where in the world are they talking about doing this- on mud huts in Nigeria?? Is there some sort of trick that Im missing out on?

[Jon Holdman]

The trick you're missing is that you're looking at listed properties. You need to find houses that people want to sell that are not listed.

Those gurus who are saying you can do it with $10 in earnest money aren't dealing with REOs. REOs are going to require real earnest money and proof of funds. They will only cash the earnest money check once a contract is accepted, but at that point, they will cash it. And, they will generally not let you assign the contract. So, you'll need to double close with your end buyer.

The gurus who talk about $10 are talking about buying directly from the owner. You have to find people who will sell. Almost always, these are people in some sort of distress, usually foreclosure. Their houses aren't listed with anyone. You have to market to find these people, so this is not a zero dollar proposition, either. Some sort of marketing is needed, like "We buy houses" signs, letters to people in foreclosure, ads in the paper, or web pages. Once you find these folks, and negotiate a deal, you can find people who will take $10 as earnest money and that will allow you to assign the contract.

Jon