Buying Bank REO's Part II of III

Continued from Buying Bulk REO's Pt I

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The realities of buying Bulk REO's: Think about your first home. Can you picture it? Great, now rewind to the 30-45 days prior to you closing on that deal. Remember all the paperwork, appraisals, inspections, title work, and loan crap you had to deal with? How about the number people that were involved? Let me refresh your memory: Bank officer, Mortgage broker, title officer, escrow officer and or assistant, the termite inspection guy, the lawyer if there were legal issues, the appraiser, the appraisers secretary because you couldn't reach him for your apointment...I digress...

There are bunch of people involved just to close a single home---buying bulk REO's is far more complex

Why do people thing it will be a quick transaction when buying 10+ homes, or 100 homes on a bulk tape...a little dose of reality would be nice!

Lets review buying Bulk REO's and selling REO's and intermediaries.

Buyers: buyers of bulk REO's tent to be real estate investors or developers. Rarely will just anyone want to shell out a 10 Million dollars blindly on a package of homes scattered across the states. They'd prefer to buy in areas that they know and can do their DD on. The other type of buyer is one where they're going to purchase in bulk and gamble that there will be another fool in line to buy it once they add some crazy fee.

Daisy Chains and Broker Sellers: I check title on a couple random properties when I get a tape. 90% of the time they still belong to a bank which means someone fell out of escrow and then that list was distributed via the internet to 900 other people who don't know what they're doing.

Buying direct from the bank: How many people have actually bought a single REO? Was it an easy process? Did you have a few hoops to jump through? Can you imagine the level of complexity when buying dozens of these homes? Some may be sent out to an auction house, some may be listed on the MLS and some may still be in the banks pockets and havn't been released to the public yet.

Buying a tape: It's not just a matter of having the bank send you a list. When the bank compiles a list of homes it has several important things to do first. Job numero Uno is to verify that YOU are going to BUY the homes when the bank gets a list together. To do this you must first PROVE you have the money. No loans, No credit cards, no weprovidethecash.com things can be involved. CASH, HARD CASH and nothing but CASH, CASH, LIQUID CASH. Goodbye! If you didn't pass step number one, you won't get in. The banks were nearly destroyed by ultra-leveraged borrowing schemes in 2003-2007. They don't want to repeat this mess. Buying in cash tells the bank that you have the ability to hold on to that property and you won't go into foreclosure. Once you prove you have the cash, the bank has to be able to legally offer you product.

Be sure to read Part III coming soon...

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