whats the first step in getting reos listings to wholesale? im hearing different things beign said by a fellow wholesaler like its a must i get mls access,and i need to find the top reo agents and also get the reo deals before it hits the mls,my thing is how do i gain mls access and how do i find the top reo agents in another state as well.any advice would gladly be appreciated
You don’t need MLS access, just a patient, knowledgeable agent to make a lot of offers for you. One way to find one is to simply find a listed REO and talk to the agent who is listing it…tell them you want to make offers on REOs and I’d think most would jump at the opportunity.
However, if you’re a newbie I can think of several reasons why I wouldn’t recommend starting out trying to wholesale REOs.
what would those reasons be man?
Banks are a pain to deal with and dealing with them can be downright daunting if you don’t know what you’re doing. They’ll want proof of funds, along with a big non-refundable binder deposit (in my area they seem to require around 1% of the sales price). You’ll then have to dance with the bank for God knows how long to arrive at a realistic price, and this usually goes nowhere…in most cases the bank is thousands of miles away and has no clue what rehabbers are buying houses for where you live. Also you’ll need to ensure your wholesale price is less than what the bank had it listed at, because the first thing your buyers will do when they find out about the deal is google the address. If they see the agent’s listing at a lower price than you are marketing it at then you’ll probably be SOL. Then you have to be creative when flipping it to your end buyer…you won’t be assigning it, the banks’ contracts are non-assignable…you’ll have to contract it in an LLC then sell the LLC to your end buyer (which is potentially problematic for another host of reasons) or double-close it which means 2 sets of settlement costs, or contract it in a land trust then assign the beneficial interest to your buyer, or some other cockamamie Godforsaken paper shuffle. THEN they only give you a short window to close…can’t close in time??? Bye bye earnest money. Better have that buyer lined up or have one heck of a buyers list. Oh did I mention the numerous addendums, contingencies, etc? By the way none of these things I just mentioned apply when dealing with motivated private sellers.
The good thing about REOs is they are easy to find and the agent does most of the work. But you will really need to know what you’re doing.
As usual Archie is 100% right - wholesaling REOs is a PAIN to complete all the way through. Sure the deals are easy to find, but that’s what makes them so challenging in my book - tons of competition for the same deals and more importantly - the sellers (banks) offer you no flexibility and THEY make the rules - and yes there are tons of rules…
Much better working with private sellers - practically no competition, I make the rules, and lots of flexibility in case your buyer flakes out.
well my reason for wanting to get into the reos is simple,i have a buddy of mines,that has been closing quite a few of these in south carolina and he and i were going to jv on deals until i really get the hang of it,since he’s got a real big and active buyers list,he’s closing quite a bit of deals this week and 1 next week as well.
U may say to yourself why am i even trying to wholesale reos in south carolina but reason being the population is so small here and wholesaling just doesnt work here.what do you all suggest
How does a bank know that you are wholesaling property?
Also when making offer using transaction funding, does transaction funding company provide proof of funds to you in order to make offer?
The best way to gain MLS access is to develop rapport with realtors where it can develop into a great relationship. You want to make sure you develop a relationship with an investor friendly realtor. “Investor Friendly” meaning this: They have the same creative mind as an investor does. You may actually go through a dozen realtors before you find one you are compatible with. This could take some time, but if you stay persistent then it can definitely happen.
Once you have found that special realtor or two you can have them start sending in offers to REO agents and they will run comps for you as well. This is a great way to gain access to the MLS.
Also find a way to hook up with local wholesalers in your area. They may be able to give you more insight on where you these investor friendly realtors in your area.
Hope this helps! :smile
If you have a buddy that is working the system with success then there is your mentor. If you are going out on this on your own then you are in for a rough ride.
Another reason why wholesaling REOs is so challenging is that banks realize that this is a seller’s market now and they are pricing their properties very close to or even at market value due to a high demand. This makes negotiating a wholesale deal very difficult and the profit margin for your headache will be much less.
I would rather recommend wholesalers focus on non-REO’s such as abandoned homes, out of state owners, NOD filings, FSBOs and other non-MLS listings.