Wholesaling bank owned properties?

[Matthew Santillanes]

Can I wholesale a foreclosed/bank owned property the same way I would with an individual owner?

[Bill Gulley]

You know, there are some things in RE that new folks just need to stay clear of, really, if it weren't so I would not say that as I know it's hard starting out.

If you don't have cash to close, or get cash by closing you need to stay away from the following;

REO offers or contracting

Foreclosure

Owners in foreclosure

All of these aspects are covered by various federal laws and messing in these aspects can get you into serious trouble.

There is no system, no method, no arrangement for you to connive your way around the issues you can get caught in.

Reading guru stuff, listening to voodoo investors that have some method aren't putting their name on that contract nor will they be getting hammered the guy in trouble will be you.

Plenty to read here, consider who you listen to in any public forum.

Interference in any banking operation of a federally insured depository institution with the intent to mislead or misinform any officer of that bank or attempt to do so, with or without the intent to profit in connection with that information is a violation of federal banking laws punishable up to ten years or fines of up to one hundred thousand dollars, It is bank fraud. Bank fraud is a little different than other issues of fraud as in other cases you must be shown to have the intent to profit or profit as well as other hurdles to prosecution, not bank fraud. No financial  gain must be shown, nor must a bank suffer a significant financial loss.

People who have received notices of foreclosure are now covered under federal law as well when someone who is not an attorney or a HUD licensed credit counselor or working in a non-profit entity contacts that person and advises them on any matter related to the pending foreclosure, to include advising them of taking certain actions to avoid foreclosure.

Doing trusts or LLCs or partnerships takes expertise in business entities as well as RE, these are hard things to sell most people into doing, there is no step by step function about it.

If you screw up, take a property off the market, put the bank or homeowner in a poorer marketing period, like winter, cause delays, missed sales, wasted the time of some salaried asset managers, added administrative expenses for the bank and then find you can't close as agreed and it is discovered you don't have two nickels to rub together, you can be nailed. Not only will you really tick off the bank, the Realtor, the title company and closing agent, you will have caused financial harm if it's nothing more than paying the bank employee salaries of those you had to mess with you.

You could have agreements coming out of your ears with buyers, you can't force any buyer to buy just before you are required to buy and if they don't you are in default.

Matthew and Dell, I'm not just blowing smoke at you, this applies to all new wholesalers thinking down these lines.   No money wholesalers need to stay away from REOs, banks and foreclosure matters until they are no longer newbies. And then under the guidance of an attorney!

Not personal, not a tongue lashing, just a to the point matter of fact post that has been discussed in may threads on the topic that people never search for before asking the same or similar question, so, since you have a great title in this forum, others should be able to find it, thanks for the good title and question, it's why this is a more detailed post. :)