How to SUCCESSFULLY wholesale REO’s?

Question

I’ve been hearing about some investors wholesaling REOs and I’m curious on how this works when investors have the same access to see them as we (the wholesalers) do? I could see negotiating a lower price than listed but I’m sure it wouldn’t be much of a difference after adding an assignment fee. Can someone that frequently does this explain to me how it works?

Wayne Brooks · Answer

You’d have to find suckers, and how to wholesale non assignable contracts.

Ty Primers · Answer

@Lisa Thoele thank you and I’m sticking to off market deals to wholesale and I’ll look at REOs for my personal investments. Anything other than that sounds like an overly complicated process.

Michael Ablan · Answer

The only way I know how to do it is to actually buy them.  Every REO contract I've entered into has been non-assignable.

Tim G. · Answer

This used to be done with HUD homes, its like threading a needle and in most cases there's contract provisions to stop this tactic. Its often sought out as a method since folks believe they won't have to spend marketing to find deals.

My advice would be to pick a strategy that actually works. This one isn't sustainable.

Michael Ablan · Answer

The only thing that matters is the contract. Every property is available to everyone.  The value is derived from a persons ability to negotiate and lock down a contract that has the potential to yield a good return to the investor.

I just missed out on a deal that I'd gladly pay $5k higher than their contract price.  I estimate I can make $50k on the deal, so the extra $5k in purchase price is just a bucket of water in a much larger pond

Ty Primers · Answer

@Michael Ablan I’d do a double close for sure but I just wondered how possible it is to do this when everybody has the same access to view them but I feel the best route is to track them from the time they are being sold at the auction and tie them up as soon as when they make it to the REO lists.

Michael Ablan · Answer

A double closing is definitely one good way to do it.  The other option is fine too.  The main issue here is that banks make you sign their contract.  Their contract specifically says you can NOT assign the contract to anyone else.

One workaround I've heard is people will put a property under contract in an LLC, and then sell the LLC.  The buyer of the LLC now has the rights to continue with the contract.

I haven't heard of any other way to do it though

@Ty Primers

Ty Primers · Answer

@Michael Ablan you mean as in double closing or just buy it and hold on to it for however long until I decide to sell?

How to SUCCESSFULLY wholesale REO’s?

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