Marketing the REO to end buyer...HELP!!

Bird Dogs, Wholesaling
1

:help OK, so I am in the process of placing an offer to the bank for an REO. Now I am also talking to other investors to whoelsale this property. so far, a couple of the investors have asked to see the property. How do I go about showing the property if I am still waiting for my offer to be approved by the bank? I find it difficult to market for a property that really isn’t mine to sell. What other techniques exist to market to other invetors during this phase of the game. I intend to use transactional funding, so therefore I need to find the end buyer ASAP.
Thanks to anyone for their help and advice!!

2

Be very careful because if you market a property without having some sort of equitable interest in the property especially a bank REO you are going to end up in very hot water.

You are going to have to wait until you have the property under contact to market it. On top of that since you can’t assign REO’s you’ll have to find a buyer that will do a double close.

3

I always start marketing my deals to my solid buyers while I am still negotiating with the bank.

I tell them I am in the middle of negotiating a deal with the bank, and ask them if I was to get the property to them at x dollars, would they be interested. They tell me yes or no, and then when I get it locked up with the bank I sign a contract with my buyer.

There is always the risk of them going around me, but I’ve never had it happen.

Steph

4

I think you should wait till you have the property under contract. A short sale is one thing but an REO is a totally different ball game. If you are not under contract your buyer could offer more to the agent and steal the deal. Your buyers can pay more than you because you are looking to wholesale the deal. Here in Jersey I here of that sort of thing happening to new wholesalers all the time.

5

I agree. It’s like the old saying “don’t count your chickens before they hatch”. Don’t count your profits until you have a signed contract :biggrin

6

As everyone already said, don’t market the property until you have
a contract on it… You NEED equitable interest before you can sell
it…

Now to build up your buyers list, don’t market a specific property,
unless you have it under contract, just market generically and tell
the investors that you get deals all the time at good prices… When
you get a good deal, you’ll email them…

HTH

7

When you guys get it ratified how do you sign a contract with your end-buyer? Do you use the same contracts you used when placing your?

I mean do you use your agents forms?

Thanks

8

do you have a solid buyer???

9

You definitely can pre-sell the deal while you are countering back and forth with the bank. You don’t have to tell the buyer the address of the property per se. You can just give them the details on the area of town, style of house and some other things. The price that you can get it to them at and the ARV.

IF they say they would be interested in a deal like that then proceed to lock it up and then give them all the info.

10

I guess the character of the end buyers I deal with is better then those in your area. If it makes sense I sign a separate contract detailing our arrangement and then add him on to my offer with the lender. So basically we have agreed to purchase it together from the lender.

Thus I have sold nothing that I don’t own, I have just contracted to do a deal based on doing a deal. The end buyer buys me out in escrow, there is no assignment problem from the lenders point of view because the end buyer was on the contract already and was a principle in the original contract.

I used to do this using a land trust but lenders started avoiding selling to trusts. Once they got their money who cares if a land trust was the buyer, they got rid of a REO and the money is in the bank, lenders are not really that smart.

11

I don’t know how solid buyer you are talking about but it’s not a good practice. Anything can happen out of the blue. it might be some external factors that you didn’t count. Moreover it’s not risk for the business it’s risking yourself

12

No Way! Don’t count your profits until the checks cleared and cash in hand!!!

13

Steph,

I’ve been following a lot of your posts from this site and others about how you wholesale REOs. On some posts you say you use a non-refundable deposit from your buyers to pay for the EMD. In this partuclar post I’m responding to, it sounds like you’re placing offers with the banks/lenders before you get your buyers. So, are you using your own funds for the EMD or are the banks/lenders not requiring EMD at the time of your offer?

The EMD issue (which seems to be an upfront requirement in Northern Virginia) is keeping me from making offers. I need interested buyers first so I can get them to give me non-refundable deposits, before I make offers without risk of losing $1,000 to $2,000.

Thanks for your time.

14

On the first few deals I closed, I didn’t have the money for a deposit, so I would shop my deals to my end buyers while I was still negotiating with the bank. I was able to get a deposit from my buyer and then use that as my deposit with the bank.

I don’t recommend using this strategy, as it is very hard to pull off, and there are a milllion things that can go wrong. I was desperate to do a deal at the time, so I made it work.

Steph

15

Steph,

Thanks for the quick reply. By saying you were negotiating with the bank, do you mean you had already made an offer without making an earnest money deposit?

Demos

16

Your earnest check is not usually deposited until your offer is accepted by the bank.

Steph

17

To make an offer on an REO you don’t need the earnest money check upfront.

1 of 2 things will happen:

  1. You will run across a number of agents who will allow you to submit an offer on the property without anything. What they will do is show in the contract that the earnest money has been received already. When the offer is accepted then you have to come up with the check.

  2. If a check is required before you make an offer, then they really only require a COPY of a check, which you can use whatever as long as it’s a COPY of a check with your name on it. I have even gotten away with using a starter check to where I just wrote my address in on it. With this copy you don’t even have to use that specific check when you are required to put the money down.

Either route you go, once the offer has been accepted then you have to put up the real check.

18

Have to agree with Nick and Ted, anything can happen, especially now that so many lenders are putting that can cancel at any time for any reason when they accept a deal on their addendum.

So it doesn’t matter if you have a contract, I can walk in behind you with a better contract and you better be able to match it and perform, or those dollars you were seeing will vanish into thin air, and reappear in my pocket…

Ted, are you the same Ted Thomas that was doing a ton of foreclosure buying in Contra Costa County in the last century?

19

I’ve seen that clause in the addendums as well, but I’ve never had a bank come in and back out of the deal once your earnest money is in place. I won’t say it can’t happen because it’s right there in the contract but it’s possible I suppose.

20

Wait until all necessary requirement are set, patience is a must to stay longer in this industry.