Is any one out there flipping REO contracts? I know banks don’t allow assignable contracts. I have heard there are ways to flip the contract to cash buyers through a variety of different techniques. Is anyone successfully using any of the techniques? You don’t have to give away your secrets if you don’t want to, I just want to know if some is consistently doing it
Thanks
I just want to know if some is consistently doing it
Consistently I doubt. MLS REO’s are available to everyone so why would someone need a middleman. I am an investor and when wholesalers come to me with a property on the MLS I think they are fools. Experienced wholesalers find people problems. That would be prior to foreclosure, not after.
I don’t know why there are so many people around here talking about wholesaling REO’s. If you were going to do that you need to buy the property and you would be selling it to an owner/occupier, not to an investor. UNLESS, you have a bunch of idiot investors in your area which I doubt.
I am doing it on a consistent basis, and have been since the beginning of last year. I sell them to cash investors and do a simultaneous close so I don’t have to bring cash to the closing table.
With all due respect, Hooch, I don’t think you know what you are talking about.
Steph
Also, this depends on the area as well.
Every market is different. Maybe you can still find FSBOs in your market…but there are some markets/areas where people don’t have equity.
And the little old lady that bought in 1976 isn’t going to sell her house at a price lower than the REO’s properties. Sure…you could try to find these people that need to sell dirt cheap but wouldn’t it take less time to just make a bunch of offer on SELECT Reo properties??
Again this all depends on your market…
I’m sure it is different based on where you are.
The Lazy investors around here look at MLS and don’t need a wholesaler in the middle of a MLS property. What they do need wholesalers for are properties that are not listed. I guess investors around here are a little more savvy than the ones that you are working with. Most investor property on MLS here is nothing but leftovers as we buy preforeclosure or on the court house steps. The ones that could be good that make it to the MLS due to extreme liens and judgments with creditors unwilling to shortsale at what is needed get picked off within a week of being listed by these lazy investors and not so much by wholesalers.
You are obviously in a market where investors have no idea where to get property but I must say that it surprises me because usually the first thing that comes to mind is the MLS. But that is good for you if this is the case which I’m sure it is. :biggrin
And the little old lady that bought in 1976 isn’t going to sell her house at a price lower than the REO’s properties. Sure…you could try to find these people that need to sell dirt cheap but wouldn’t it take less time to just make a bunch of offer on SELECT Reo properties??
You are right that it will take less time to buy a house by putting lots of offers on REO’s if there are that many to put offers on. But you can buy 4 REO’s and make a quick 5K on each or easily find one and make 20-30K as a wholesaler. I just bought another triplex on my own wholesale deal for 39K, put 6k paint and minor repairs for a total of 45K. It rents for $1,450. Using the 2% rule which is what MANY investors by with it is worth $72,500. Or I could sell it retail for significantly more. Triplexes around here at retail go for $150K and I would probably have holding costs of 8 or 9 months.
Do you get my point? There is significantly more money in finding people problems than REO’s. But, you are not looking for the little old lady with equity. I have posted MANY ways in other threads to find the real deals and people problems that are solvable.
First of all, 99% of my buyers are old time landlords who have been in the game for many years. They aren’t stupid, or lazy, nor am I.
It ain’t easy getting good deals off of the mls. There is a ton of competition right now for REOs because there are some SMOKIN’ REO deals that are popping up on the market.
Why do investors need wholesalers like me to get them deals on the mls? Because most of them aren’t fast enough to snag the good ones when they hit the market.
I’ve had a couple of buyers who had the same mentality as you do- they thought they would just bypass me and go cherry pick the great deals off of the mls. They found out after a month or so of trying that it’s not that easy, and they ended up coming back to me for deals. True story.
Steph
Yeah…it’s definitely not that easy to find and GET deals of the MLS. Many offers need to be made and you have to make sure the property is in decent shape. There are a lot of REOs that aren’t worth it for what is being asked.
If you can find a deal on the MLS that is great, if you can find a deal through a FSBO,etc that is great too…but people shouldn’t dismiss the entire MLS as useless…
Markets are always changing , and it might have been that way before but then the market changed. There are some markets with very very few REOs, and others that are saturated with them. It just all depends.
Whatever works in your market is best .
Tampa Steph
[b]It ain’t easy getting good deals off of the mls. There is a ton of competition right now for REOs because there are some SMOKIN’ REO deals that are popping up on the market.
Why do investors need wholesalers like me to get them deals on the mls? Because most of them aren’t fast enough to snag the good ones when they hit the market.[/b]
Are the banks in your area not holding out and having “bidding wars” treating the property like it is on auction? That is what they do here. They will not accept an offer right off the bat and will say that you are now in a competitive bidding process between bla, bla bla. And to give your new best offer.
Within a couple of weeks they have 10-15 people on that ONE house and it is basically bid up to a point where there is no room for a wholesaler. But, there are no where near the amount of REO’s here as there are in Florida. I am in one of the more normal markets that is pretty typical throughout the country. We didn’t get hit that hard.
I’m glad to hear that you don’t have to deal with this there.
Once the REO’s are back to a normal level you can do some of the things that I have posted which are not hard to do and I will go out on a limb and say that they pay significantly more than the REO’s do but I don’t know your area so that’s why I say out on a limb.
If anyone’s state is on this list it appears that you should not listen to what I originally said until the foreclosures wash up which at that point you will need to make some modifications in your buying. http://money.cnn.com/2007/06/19/real_estate/500_top_foreclosure_zip_codes/index.htm
Hooch,
There are bidding wars here on many of the properties, but not all of them. I usually go after the ones that have been sitting for awhile- that’s where I’ve had most of my success. The banks get a lot more flexible once the houses have been on the market a few months, especially the ones that have fallen out of contract several times.
I agree that the profit margins are usually larger with non-listed properties (most of the time, anyway), but there are also marketing costs that go along with FSBOs that you don’t have with REOs.
I think there’s plenty of opportunity to make money with both FSBOs and REOs, it’s just a matter of personal preference.
Steph
Steph,
What are the reasons that you find the properties have been sitting? Is it the condition of the property? The price is too high?
How much lower percentage wise are your offers versus the asking prices?
All kinds of reasons, usually too high of an asking price, and they will gradually drop it. I keep an eye on them and make an offer every 30 days. I offer on the ones I want until I get them or someone else does.
I usually won’t offer on something if it is 30k more than what I need to get it for. I’m working in the lower priced properties (60k and under), and they usually won’t drop more than 30k off list, from my experience.
Steph
How can we do this and Filp REO’s…? I dont get it really… simu closings are harder and harder to comeby attny willing to do them…
If you can’t find a title company who will do a simultaneous closing, then you can use transactional funding to close on the deal, then sell to your buyer.
There are still plenty of title companies doing simul closes, though. You just need to know where to look.
Steph
So what is the difference between simultaneous closing and transactional funding. If I don’t have a title company I can do transactional funding but what is that.
A simultaneous closing is where you use your buyer’s funds from the B-C transaction to also fund the A-B transaction between you and the bank. Since you are using your buyer’s funds, there is no need for transactional funding.
If you can’t find a title company willing to do a simultaneous closing, then you can use transactional funding to fund the A-B transaction (between you and the bank).
Transactional funding is a short term loan that allows you to close on the deal between you and the bank so you can then sell the property to your end buyer. You must have an end buyer lined up or a transactional funding source will not fund your deal.
There are fees associated with transactional funding, so you have to factor that into your offer.
It’s best to have all of this lined up before you start making offers.
HTH,
Steph :cool
Steph, Are they still doing simo’s where you are at, and if so are they a national title company? Herbster
That’s how I close all of my deals. There are 4 title cos in Tampa that I know of who will do them. I don’t think any of them are National, though.
Have you tried asking some of the active REO wholesalers in your area who they use? That’s the best way to find them.
Steph :cool