Getting started with REOs

[Rashad Brooks]

Hey BP,

I wanted to start acquiring REOs to wholesale. Does Anybody have any advice for me dealing with REOs?

I am new to this and I am all ears. Thanks in advance for the advice!

I already have an attorney that does dry closings also, I know that is something that is very important. 

[Ron S.]

Originally posted by @Account Closed:

The big things about REO's are the following:

• You can't assign
• No contingencies
• Cash only
• Typically, $1,000 EMD minimum nonrefundable
• Typically, short closing window - 21 days or less
• Typically, the bank pays the commission (3%) and closing costs

REO purchases are like any other purchase. You can finance REO purchase. The only cash transaction requirements would be for those that are not financeable due to some issue (Like deferred maintenance or city/Fanny/Freddie/FHA requires fence around pool and there is no fence or maybe the property type is not eligible for sale on secondary market or any number of other reasons) but short of that, anyone can finance an REO purchase if they meet the lender's requirements. I sell my REO all the time with financing. I prefer cash buyers but there is nothing wrong with me getting my cash in 30 days at full market price over a cash price with a discount because it will close sooner. My observations are similar to yours @Lock Mett with a few differences:

• Contingencies vary depending on the issues of the property. There CAN be contingencies.
• EMD varies and are refundable typically. Any qualified agent representing the buyer will build in refundable component of the EMD in the contract.
• There is no typical closing window. Those will vary depending on the complexity of the transaction.
• Bank pays all commissions all the time and any closing costs are negotiated like any other open market transaction. Since the bank owns it and is the seller, who else do you think is gonna pay the commissions other than the seller?
• Bank also wants to see proof of funds for cash or preapproval from lender if financed.