This is a Three part Blog about buying REO's in Bulk and individual homes. Brought to you by Silly Prices Sweet Deals.com/1.html
We'll cover these topics:
1. The realities of Buying Bulk REO's, and Buying Bulk REO property or bank owned homes.
2. The reasons its not as easy as it may sound.
In this blog we'll discuss the difficulties of buying bulk property from banks.
First Encounters with the REO: My first encounter with bulk REO's (akabank foreclosed homes) was when a client asked our firm about buying bulk REO's. At the time I was a Financial Adviser and knew very little about what he was looking for. I asked around with some of my old Real Estate contacts and stumbled into a bunch of people who could help me find "a Tape". Well, I'm glad I've started that process because its turned out to be quite a fun and rewarding adventure but along the way there were huge hurdles I needed to get through and so much crap to put up with to get real answers...
Too Many Chiefs: One of the biggest issues most bulk buyers run into is the daisy-chain or broker-chain. This is a complex network of people who say they know a broker who is directe with the sellers mandate or rep. There have been times when I ask, "Are you the seller on this package"? The response i get is, "No, but my associate knows the broker who is direct with the corporation who is in charge of the sellers mandate". What?? You'll gain more respect from me by saying you're with the Mob, and Vinnie was the guy with the thing at the place when the deed was done...fugettabout it...
Honesty: This is the first thing that lets me know if I'm on the trail of a real seller or some clown who doesn't know what they're doing. If I ask if someone if they're the seller or buyer and they say no, then I may be headed in the right direction. What I need to have a successful transaction is one buyer who will write a check and one seller who has the deeds. If I have to deal with Tom who knows John, who then must speak with his boss Melissa who heard about Timothy..... I hate to break it to people but half the times when you say you've got a tape, you've got a tape that fell out of escrow at the bank, was sent out to a few securities reps, who then passed them on to a few real estate professionals, or developers...it snowballs from there.
Just last week I was talking with a seller who sent me a tape...and something just didn't seem right. I pulled up my old tapes, which by the way I keep on file for smoking out the daisy chain groups, and this particular tape I received 3 weeks earlier from someone else at a SUBSTANTIALLY HIGHER PRICE! Basically the original "source" who sent the tapes marked a $700,000 tape to over $932,000. REALLY? $230,000 profit for forwarding a list to someone? Riduculous!
The seller and I had a good laugh.
The best way to make sure intermediaries and broker chain stay tame is to have the buyer put the funds into escrow to be verified by an escrow officer and then that escrow officer affirms the buyer to the bank. Done! If the buyer is real, then the bank moves forward. Do you think Countrywide or Chase need to PROVE to YOU that they have property for sale? Not a chance. Often times this, "We need to verify product" is merely a ploy to release a tape so that person can market it to the world... bad news all the way around.
In the next blog, we'll discuss how things really work at the banking industry when you want to buy in bulk.
Keep an eye out for part II and III of Buying Bulk REO's and bank owned property.
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