REO - Can it be wholesaled?

I am looking at several wholesale properties. I have nvere done a wholesale deal, and wondering if my contract is accepted by selling banks, can I assing the contract someone else?

Do banks like this kind of deals/Assignments, if so, what is different in dealing with banks? Any general comments?


Hi Jay,

I am brand new to REI and wholesaling, so I’m not sure if this is accurate info. or not, but the three properties that I have looked at so far that were REO’s, the contract was NOT assignable. However, this does not mean you cannot wholesale the property. It means that you will have to do a double closing on the property, which in turn leads to double closing costs.

I don’t know if this is true for ALL REO’s, but this is what I have encountered in the three REO’s I have looked at.


REO’s usually specify the contract and paperwork to be used. I’d be quite surprised if they would permit an assignment on one of their contracts. But, if you find a lender who does it, shoot me a message and let me know. I’d love to do business with them!


Put the propety in a LLC, then sell the LLC example 123 main st, just put the LLC in the property address then sell the LLC to another investor. You also can put in a Land Trust

thats the only way i sell my properties is in an LLC.

I have never sold a REO property with an assignable contract. It is going to be in their addendum that this contact is not assignable. I get contracts all the time with the buyers name and or assigns. It doesn’t fly in the corporate world. There are several obvious reasons for this like…banks immediatley think the property is priced too low, they’re loosing money. If they allowed this practice every agent and savy smart investor would be tieing these properties up with assignable contracts. I sure as heck would. It would be a nightmare for the lender and the RE professional. Also, assignable contracts have a tendancy to fall apart. They know all this already. Agents and investors always get ticked off when I tell them they must rewrite their contract, the banks will not even look at it.
But if anyone thinks they know a lender that will allow this please post it. I can promise you none of the big asset companies will allow it.
Also, call the listing agent representing the bank. They should tell you immediately, NO WAY! Don’t even bother.

For me, double closings on REO properties are darn near impossible. Most of the closing firms used by the banks are located in south Florida, so they are mail away closings. There are a lot more fees involved. But, the biggest issue is finding a REO priced cheap enough to pull it off anyway. I mean I am constantly fighting with my clients to reduce prices. Its the growing trend for them to market these properties at a higher asking price than makes sense.

My advice, look for other REI opportunities.

I have a question on putting the prop in an LLC and selling the LLC - does that mean I need to set up an LLC each time I buy a property? For me that would be $300 a pop plus endless bureaucratic junk to make sure it’s done by closing time.
It’s not the $$ but the state crap that has me thinking that could be a pain. Or am I totally misunderstanding this?

I have to reply to Vidaloca with that most famous of non-answers…

  • It all depends *

In general, LLC’s, trusts, corporations and the like have their purposes for both minimizing tax liability, maximizing assett protection and maintaining privacy. Sometimes these things come together nicely in a structuring strategy–other times these goals are at odds with one another.

  1. It depends on what you’re wanting to accomplish-- minimize taxes, protect your assets or keep your name out of the public records. You can even facilitate transfers (pseudo assignments) by buying the property as an LLC and selling the LLC like TL and reihome mentioned. There are some financing challenges to this approach, however.

  2. It depends on your tax situation. Is the majority of your income w2 (job) or investment? Do you own a business and are self-employed? Do you have expenses or losses that can offset income? Blah blah blah.

  3. It also depends on your state laws. How well defined are LLC laws in your state? Trust law? Just because a structuring strategy works well in Florida (my state), it doesn’t guarantee that you’ll have the same results in your state.

  4. It depends on how much cash you’ll be taking out of your investments and how much you be reinvesting.

  5. It depends how much paperwork and cost is involved. In some states, setting up an LLC is realtively easy and inexpensive. In others, it’s more complicated. It sounds like setting up an LLC in your state may be a costly hassle (but even $500 bucks on a five figure profit is a small price to pay).

  6. It depends on how you’re financing the property. If you pay cash, you can do whatever you want. However, have you found any leders who want to lend money to a newly established LLC with no credit, no assets, and no track record? If you find one, please let me know! You may have no other choice but to finance the property with your personal credit and guarantee. Later, perhaps, you could transfer ownership to another entity, such as deeding the property into a trust and naming.

  7. It may depend on the underlying financing. If you have a typical mortgage with a due-on-sale clause, deeding a property straight into a land trust will trigger the due-on-sale. However, placing the same property into a land trust first with an LLC as a trustee (or benificary if you wanted to sell it) could avoid this problem.

It depends, depends, depends.

The best advice I can offer is to talk to investors in your state who are using these various structures to accomplish their goals. Ask specifically if they are structuring their entities to reduce tax liability, maximize assett protection or protect their privacy.

*There is no one-size-fits-all answer on how best to do this! *

My strategy of mult-tiered LLC’s (one operating LLC, many holding LLC’s) in combination with land trusts gives me a lot of all three. But, It works for my situation. I can’t say it will work the same for yours.

  • Get a good tax account – preferably one who is activly investing in real estate. They are worth every penny you pay them *

  • Get a good attorney to help you structure your entities to protect yourself and your assetts. *

And, don’t be surprised if you get different answers on how to best structure your investments. Like I said, there are times when you have to decide what goal is more important and chose between different options.


That was a very informative post Jimbo. Thank you.

Do you know of anywhere I can go online to learn more about all the different types of corporations. I want to set these things up but I do not know ANYTHING about them.

My main thing is not wanting to pay so much in taxes.

Why would someone want to hide their identity with these deals?

Sorry I probably sound like an idiot but I am when it comes to this stuff.


Hey aznewbie,

I’ll have to check to see if I have a favorite website for business entity structuring. I’ll try to find one that deals specifically with real estate investing in varous entities. Instant message me with your contact info and I’ll send you what I have.

My main thing is not wanting to pay so much in taxes.
Good. That's my priority. The probability of incurring tax liability from your investments is 100%. The probability of getting sued is much, much less.
Why would someone want to hide their identity with these deals?
When a lawyer goes to sue someone for money, the first thing they do is discover how much money and assets the defendants own. This is often done through public record searches. If your assets are in other entities and other names, they will think you own little or nothing and will have no reason to sue you. If everything is in your name, you're a bit target for lawyers. Lawyers usually don't sue over principal (because they lack principal ;). haha Besides, I believe in the right to privacy granted in the constitution and think that some things are just none of anybody's business.
Sorry I probably sound like an idiot but I am when it comes to this stuff.
Of course not. This board exists beacuse we all have questions and there is usually some helpful soul who's been there and done that to help us out.

I’l love to hear about your investing. Where are you located? Any chance you’re in FL? I love to mentor, partner and work with bird dogs who are getting started. It’s been a good experience for me and has helped the people I work with.


Thank you so much for the info Jimbo.

Im in AZ, I’ll PM you tomarrow.