Wholesaling REO's?

Question

Hey is there anyone on BP familiar with the actual process of wholesaling a REO occupied property? I ran across the property today while scrolling through a nice neighborhood here in Atlanta. I wrote down the address, found it on zillow, and the price is definitely a steal. I just need to figure out how to get it since the banks won't accept P&S agreements.

Jon Holdman · Answer

Purchase and Sale Contract.  A contract to buy the property.  You make an offer on a listed REO just like any other property.  The bank will not let you do an assignment and will generally make it tough to wholesale a property.  Further, its on the MLS.  Anyone can buy it at the listed price.  So, by definition, the listed price is not "a steal".  If it was, it wouldn't still be there, unless you're very, very luck and have your timing just right.  There's something you don't yet know about this property.

Will Barnard · Answer

You can do a double close with any entity or any reasonable name. The issue there is that you have two sets of closing costs and transactional funding fees for your loan. That typically will eat up your profit margin.

You can form a new LLC to use for your offers, once you have it accepted and have your buyer, you simply sell your shares to the buyer for your wholesale fee. But you still need to send a POF with your offer so if you don't have one, you will need to figure a way to get one or make an offer subject to financing (which lowers your chances of acceptance in this market).

Bill Gulley · Answer

And, you'll be spinning your wheels as banks won't be taking assignments, 99 out of 100 times, if at all.

Partner with real buyers in an LLC. Your job, find the deals, do the leg work, their job is to fund the deal and close it. Contract to buy in the LLC name and show good funds to do the deal.

Basically, you're birddogging the deal inside an LLC or you're wholesaling it, you cut comes out of the operating agreement, not an assignment of the contract.

Your LLC can spin it off, hold it, rehab it and sell, do what ever and the ownership is again through the capital account and operating agreements. A Series LLC is nice for this type of structure, BTW.

Otherwise, you're gonna be barking up a very tall tree. :)

Will Barnard · Answer

REO and short sales are the most difficult to wholesale. If you choose to wholesale, I would suggest finding standard sales or direct market to motivated home sellers. Then, a simply purchase agreement with an assignment clause is all you would need contractually.

Don Clark · Answer

I actually have my own LLC. Would you say that increases my chances?

Junaid Subzwari · Answer

@Don Clark , I'm a bit of a Newbie and saw an LLC comment mentioned above, but couldn't create a new LLC, have the LLC buy the property, and then have your investor buy the LLC instead of the property?  I apologize if someone already said above but in fancier terms :-)

Bryan L. · Answer

@Don Clark  - I noticed that you mentioned zillow in your op.  Do some searches here on BP about zillow.  Much of the info on zillow can not be trusted.  Especially not the "zestimate".   And they often are not even accurate on which houses are for sale and which ones are not.

Vincent Johnson · Answer

Hey @Don Clark,

It is better and easier to wholesale or assign off - market properties, meaning they are not on the MLS and it's a homeowner that needs to sell. But you can do listed properties but you'll have to make a bunch of low offers to get a good deal.

let's just say you get an offer accepted at a good discount you'll need a POF from a transactional Funding company. Just type it in google, a few will pop up, research a little. But they'll fund the deal as long as you have an end buyer. You will basically buy it from the bank with transactional Funding then resale it the same day to your end buyer. Make sure you have at least a 10k - 20k spread in order to cover all expenses and to make a profit.

EX: you buy from the bank for 100k you need to resale to end buyer for at least 115k and what ever is leftover after paying back the transactional Funding company and their fee, taxes, and closing cost is yours.

Hope this helps...

God bless

Bill Gulley · Answer

No, not just your LLC, first find real buyers and then partner with them, inside an LLC, better chance of forming an LLC with them, in fact your LLC could be a partner.

This is getting more advanced than this thread can stand, point was to work "with" them. I'd just have to repeat my previous post. It means what it says, don't read anything into it that isn't there. :)

Braden C. · Answer

I don't think anyone has asked you this yet, do you have proof of funds? Meaning, a bank statement with funds in your name, or your companies name? If not, don't even worry about what contract to use, you'll almost certainly not get an offer accepted without proof of funds.

As Jon already pointed out, if it's a listed property then it's either not a "steal" or it's going to have multiple offers and get bid up.

Wholesaling REO's?

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