Best way to getting REO properties

[Josh Loayza]

Hey everyone so I'm trying to find the best way to acquire REO properties without having to go through auctions or online bidding wars. Is it possible to do so? Any recommendations on this? This aggressive buyer needs some answers. Thanks in advance!

[Ron S.]

I think its more urban legend than reality, to think you are going to get in front of the line with any bank owned property just because you have an account with them, or a loan or relationship of some kind. Contrary to the opinions of those that think differently, for those of us that actually work with REO's in a bank, no, we don't care where you put your money and in fact, cannot consider it in any of our decision making processes. Another fallacy exposed is working with brokers. We do go to brokers/agents. We have to unless we want some regulator breathing down our necks auditing years of REO sales.

Its almost comical with some of the posts I read out there. It shows me that they don't really have any insight into how a bank works or why they do what they do. They just base their conclusions on what they hear or see on late night TV.

There is always that outlier...that one rogue bank, that one rogue person, but for most, if not all financial institutions engaged in banking, they don't work directly with end buyers on REO property unless that end buyer is a fully vetted, institutional buyer, and usually only with bulk sales. Banks are highly regulated for everything they do. Selling REO is one of the most scrutinized and audited functions/processes a bank has. Who did I sell the property to? Why did I sell the property? Why did I sell it to them? How did I sell the property? Why did I sell it to someone at that price? How did I reach that price? What methods did I employ to market the property? Did I run an OFAC on the potential buyer? Did I run them through Verafin? Are they an institutional buyer? Those and so many other boxes I have to check off for each and every property I sell.

And then once I check off all of those boxes, and once I sell the property, I get to wait for four or more years for some internal or external auditor or regulator to make sure I did everything right, and make sure I did everything the same way as I did for every other one I did. Oh, and then I get to prove that I had the authority to do what I did. Then I get to wait for someone to accuse of me of disparate treatment of a protected class or, preferential treatment to another class. Or, I get to wait for someone to accuse me of harming the former borrower by not exposing the property to the highest potential buyer pool. Or I get to wait for someone to accuse me of harming the investor by not maximizing recovery, or harming the shareholders.

...and after all that, you really think a bank is just gonna do some side deal with some yahoo that walked in off the street because we had a beer together? This isn't 1999 or 2007 any longer. It doesn't happen the way the armchair quarterbacks that know someone that knew someone that got side deals from their cousin that worked at the local merchant bank, says it happens.

...at least that's what I've heard.

:)