How can you wholesale reo properties?
An REO (Real Estate Owned) property is a property the lender took back from someone who was in foreclosure or someone who presented the lender deed in lieu of foreclosure.
Once the lender has to take back the property (Property did not sell at the Trustee’s Sale) the lender must keep in cash reserves 4 times the face amount of the deed in cash reserves!!!
This means on a $100k mortgage note the lender has 100k (Original Note) plus $400k in cash tied up until the lender sells the property.
So how much money is that lender losing every month he owns the property? At least the interest on $500k, utilities, taxes, upkeep, maintence, HOA compliance (Not necessarily fees, but planting winter lawn, shoveling snow from sidewalks, keeping property weed free, etc.)
So the lenders have every reason to move a property and move it quick, here in the west coast in Vegas and Phoenix lenders are pricing these properties to sell, as investors getting a lender to except a quick close at 25% below FMV for a property can be done just by being bold enough to make the offer!!!
And properties needing work were deducting all the repair costs from below a pristine discounted offer!
Even if the lender is asking full fair market value, you can always make an offer for 25 or 30% below FMV as in a lot of area’s lenders are trying to get these albitrosses off there books!!!