What the best way to wholesale a REO from a realator of the mls, if the starting price $150,000 do I make and offer for 90K and hope to flip it for 150?200? Do the bank Negotiate or is that the price150 , the comps are 300ish and there are plenty of them.what do u think and investor would pay some are turn key some may need about 25K repairs? I was hopping to offer 75K is that unrealistic ? where should I start my bank offers and what should expect to ask an investor to pay I was hopping to make 5-10k on ( a double/or simo)
It’s been my experience that REOs are a difficult wholesale product. Typically, at least in my market, a bank will reject any offer less than 85% of their listing price. Thats not to say that you can’t find properties that are good wholesale deals, you just need to be patient and make good use of the option period in your contracts.
With this in mind, my strategy with REOs is to first find something that is in the ball park of 70% ARV and make them an offer that hits 85% of their list price. I do this to get the bank talking and so that I can send my contractors out to the place and get a real inspection done during the option period. If things come back worse than eyeballed then I attempt to renegotiate with the bank. If they are unwilling to give a little then I lose my $50 option and walk.
Also, another thing that you will need to look out for is that a lot of banks will not allow an assignment of contract. So, you will need to find a title company that can perform a double close for you OR be prepared to take the property down with hard money yourself and then close asap with your rehabber.
I have done quite a few bank REO’s, in many cases they won’t accept an offer below 85% of asking price because they reduce prices in certain increments over a period of time. The key is to network with enough agents so that they will call you when their is a decent sized price reduction coming down, then you shoot to get the home at 85% of the newly reduced price.
Another idea is to have realtors call you when the asset managers at the banks are ready to drop their pants to get a home off their books, I have picked up homes for as little as 35% of asking price using this technique. It all comes down to networking with the right people though.
is this what a reo complete wholesale flip looks like? iam I missing anything or suggestions? for
cash buyers do double/simo/back to back
1.) Locate property of MLS 80-150,000K/roes/bank owned /corp owned/Hud?/mrls
2.) Call realtor to visit ,listing agent or buyers?,do I need the agent to see the house,or should i go by 1st?
3.) See property estimate repairs maybe $25,000( do I need contractors? To get in for inspection),some pics are online I need to get some of my own pics
4.) Run the LTV numbers to make offer(letter on intent) ( I was thinking $75,000 on 150 props and 50 on 80K),if they wont take letter of intent,deposit which I get from investor 1st? and realestate sale contrat with inspection clause ,No assignment so whats in the contract about a double close or simo?whats my out if I cant find a buyer,use an option? ,or set up llc ,make lots of offers
5.) Start qualifying investors,my list ,we holsale list for rent signs,what arv/fmv they buy in
6.) Meet with investor who may be interested, get ernest money deposit and sight contract (which contract) hopefully a cash buyer
7.) If not a cash buyer meet with hard money lender and or small local banks,get pre approval letter,start talking to banks asap
8.) Termit inspection?,keep marketing the deal
9.) Fax docs to title come/double closing /simultaneous /how much are 2 closing fees,make sure the know how to double close
10.) Go to close to pic up check
11.) Find a mentor
on the house listed at 79,000, my investor said he pays 150,000 for his props,this ones comps at 300,000, i still need to go by tommorrow and check on repairs,
1.)meet with the buyer , has him sign the contract and collect the deposit because you trust him not to go around you
in which order does this happen?
1.)I found the reo on line 110K/comps 244 and plan to wholesale and double close
2.) contact realator tell him i am interested
3.) conatact buyer thats buys at 150 and sell it to him for 140is?
4.) can I now meet with the buyer have him sign the contract and get the deposit
thats my main question is about the deposit and contract signed, I really cant afford to fork over 1000 of my own money every time I sign a contract I was under the impression u can used the buyers money on the deposit and added his name to the contarct at this point ? is that right? in what order? can you elaberate
thx
I wouldn’t take your buyers deposit until you have the property under contract since you won’t need to come up with the earnest until then anyway.
Also, the bank you are dealing with may or may not accept you adding the buyer’s name to the contract. You can try an assignment of contract or perform a double close. If they do not agree to either, you will need to be ready to close yourself with hard money, and then close the same day with your buyer. The last option is the most realistic option since banks tend to require their own title company and they most likely won’t or don’t know how to execute a double close.
I’ll just want to caution you that when you are dealing with REOs banks expect you to close. So, you will need to make sure that your rehabber can and will perform within time you set out in your option period. If you feel like your buyer might be flakey then find another or be prepared to exercise walk and leave the option fee on the table.
Now, this is how I execute a wholesale.
A) For REOs I get an approval letter from a Hard Money Lender. * This is optional for wholesaling in general though but I strongly recommend it.
Meet with the seller.
Get the property under contract with an option period.
Start calling my rehabbers to see if the want the property.
Execute an assignment of contract with your buyer.
Close.
If you are dealing with a bank or REO you will most likely have to change " 5) " to you close yourself with a Hard Money Lender and step " 4)" goes away. Then you will now have a step