The incestuous world of REO Brokers

[Del Kelley]

I spoke to a real estate friend of mine and he gave me the low-down and difficulty of dealing with REO brokers.

The bottom line is that these reo brokers only deal with a select crop of investors. Newbies need not apply. So how in the world can a newbie break into the world of REOs and know that I can pick up a real deal instead of an inflated deal from a wholesaler?

P.S. I want to wholesale these REOs

[Will Barnard]

A good wholesaler will be able to negotiate and contract a deal with enough spread that after the mark-up, is still a good deal for an investor-buyer. That stated, adding two parties in the middle (you buying from a wholesaler, then wholesaling yourself) does NOT work as the deal becomes too conveluted and the spread vanishes for the final buyer.

IF you intend to wholesale, you MUST form relationships with those who can deliver product at good prices. You may want to start out marketing to "motivated" and distressed homweowners to get good deals locked up. The REO world is firece and the pros have the advantage, but I have assisted many newbies enter into this arena so it CAN be done.

I was once just starting out buying REO's and as such, had to spend the time to create the relationships I have now. I did not happen over night, but I started with one contact, got a deal from him and continued to build my contact relationships with others.

You can play the make 50 offers game as Jon pointed out, but the difficulty in actually getting a deal that way (as Jon also pointed out) is often not the best approach. Almost all my REO deals come to me before the general public has teh opportunity or knowledge of the property and that is the key factor to getting good deals.

Walking into an REO brokers office and asking for these pre-marketed deals is not going to happen. You must first form a relationship with him or her and they must "like you".