Wholesale REOs

[Bryant Brown]

When wholesaling REO's do you find the buyer first or do you put the home under contract? and If you put the home under contract what kind of contingency do you put in place in you cant sell the home so your not at a loss?

[Account Closed]

Apparently Patrick doesn't like wholesaling REO's very much, but that doesn't mean you can't do it.

If you're making offers with the intention of wholesaling, properties being sold by individuals are better than REO's because individuals are less likely to object to "and/or assigns" language. With an REO, you can still do a double close (some hard money lenders are willing to give you a better rate on money to double close because they know they're getting it back immediately), but you have to be careful about deed restrictions. Outside of HUD and Fannie, most banks won't have deed restrictions so you'll be fine. There are still ways around deed restrictions, though. You can make an offer to purchase the property with the buyer being "123 Main St, LLC". This LLC would be created once the offer is accepted, then you can sell the LLC to the end buyer so the title of the property doesn't change.

Making offers with one buyer in mind isn't the best strategy to use. Your best bet is developing a list of buyers so that you can blast out your deals to lots of potential buyers and create competition. However, even if you don't have a network of investors to market the property to, if you can find a successful wholesaler in your area, you can offer to split the profit with him/her if he/she can find an end buyer.

Your best bet is probably to start going to local real estate clubs and interacting with other investors. This will help you meet people that have done some wholesaling, get a feel for the demand in your local market, meet people that you can assign deals to, get an idea of what title companies are better at dealing with these transactions, etc.