Can I do this with REO property?

I am just starting out in REI. I am looking at buying REO property. Now here is my story…

Talking to an acquaintance of mine I found out she is looking for a house and is already pre-approved for a $130,000 loan. She wants to buy with 0% down. She actually saw the exact REO property I had considered purchasing, but her realtor did not show it because she could not get 100% financing on that house. Plus it needs a little work which she does not want to do. This particular house is pending anyway. I told her my line of work in REI and that if I had a house she wanted and would have to have a down payment, I could carry a 2nd or work with the price of the house. I told her I would keep an eye on the status of the pending house, because pending does not mean it is sold. So, we exchanged phone numbers.

When I got home I immediately searched the MLS. I found a home exactly what she wants. Not sure if it is REO, but is vacant. Newly remodeled so no rehab work. Don’t know if this house can’t be bought with 100% financing or why the realtor she is working with did not show her this house, but showed others in the same area.

My question finally is…
Can she look at the house while still in realtor hands and if she likes it, I buy the house. Then turn around and sell it to her to help her with the down payment by taking a 2nd?
I probably would not buy it otherwise because there is not a lot of equity, but I could make a little money by flipping it like this.

Can I do this, is it legal for her to look at it in realty then buy it from me.

Does anyone have other suggestions for handling a transaction like this?

If I understand this correctly you should be able to buy the house and sell it to her. I doubt the realtor will have any objection because they are getting a deal and the seller pays the commission. The question i have is, are you going to owner finance it to her? Or will you sell it to her directly? If you are going to sell it to her directly, i think you may have some problems. For example, If you pay 100K for the house and she only qualifies for a 90% loan. Her lending institution is only going to loan her 90K. This means you will have to bring 10K plus closing cost to the table. Even if you sell her the house for 120K to get your money back she will be upside down and will not be able to get a loan to pay you the 120K.

mcellar tell me if this makes sense

I buy the house for 75000
Sale price 100,000 to her bank
I actually sell to her for 90,000

100,000 sale price
X 90% loan

90,000 loaned to her from bank

I’m confused here. The buyer qualifies for a $130K loan but can’t get 100% financing on a o-o purchase? Is that the main problem, or is it simply the agent isn’t showing her the right houses?

As far as the agent goes, if the potential buyer has not signed a buyer’s agent contract with the agent, then the buyer has no obligation to that agent, period, with the exception, of course, of any houses that that agent has already shown her. From your post, my suggestion would be for her to get another agent anyway because it sounds like that one isn’t doing a good job.


ckcleveland I think your example will work. The only major hurdle you will have to overcome is to make sure the house will appraise at the full amount and that her lending institution is going loan her enough to cover your cost and profit. My guess is she is getting a sub prime loan. My experience with a pre approval for a sub prime loan is worthless.