Barter for REO?

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I am interested in getting a feel from a broker or banker on a barter strategy.

In today's market I presume REO inventory is increasing markedly. I would like to explore bartering new, Major Brand current model Computer Lines (Laptops, Desktops, PDA's, & software) as well as complete lines of Consumer Electronics (Flat Screens, TiVo, MP3 +++) in exchange for a single family residence in the $250-$500K price range.

If the REO owner (Or private seller who had a substantial equity in the property) were not interested in the afore mentioned type commodities, then perhaps advertising credits or hotel rooms could be secured, using the above in which to trade for.

I will acquire and price the goods at my "group buying" cost, which is the most competitive outside of being a distributor. In exchange, I would expect a return that equated to a little bit less than what i would get if it were a cash deal.

The goods are all cream and priced very competitively. I'm just trying to do this using lines for which i have extended payment terms on.

Banks do need Computers, Printers, Software & Flatscreens that display advertising messages for their lobbies.

What do you think of the concept?

If not barterable with a bank REO, then how about private sellers in tight markets like here in Orlando?

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Banks will generally not need equipment for their REOs. They have equipment or they have a set of preferred suppliers.

Lets assume there were interested. Just how many units of goods will you have to move to complete one purchase of an REO in the price range you suggested? Will a bank need that much in the way of new equipment? If they do the discounts they will obtain are likely OK so your margins might not be that attractive when you look at the numbers.

Better would be to sell the equipment and then be a cash buyer at the bank.

John Corey

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I got the idea through a NY Times story a few years back.

An airline was stuck with an expensive office lease in mid-town manhattan. They were able to finally sub lease the premise using a barter deal where, in this case, they bartered advertising. Something they would have had to pay for anyway.

I guess what prompted me to write this is the neighborhood i live in, in Orlando, has houses in the $400-$500k range that are REO and they have not had one walk through in over a year. About the worst i've ever seen.

[Account Closed]

Charles,

It is good to brainstorm and come up with new ideas. In this case I just do not see lenders being interested in what you were offering.

Here is an idea that has worked for a nationally know investor at various points.

He barters notes. Notes secured by RE. He buys them at a discount and then trades the notes to a bank for property they are holding.

The advantage is he is dealing with similar products so the people at the bank who deal with REOs tend to understand or work closely with people who understand the notes.

You also have the ability to get a large discount without needing to deal in a small unit size (like the computers).

John Corey