Imagine the first home you bought. Can you name the people involved in that purchase? 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 Crazy Bulk 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 appointment…I digress…
There are so many people involved just to close one home. Buying bulk reo’s is far more complex. Why do people think 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 tapes tend to be real estate investors or developers. Rarely will just anyone want to shell out a a Million dollars blindly on a package of homes scattered across the entire United States. They’d prefer to buy in areas that they know and can do their due diligence 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 usually pull title on a few random homes to verify. 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? Imagine how complex buying hundreds of these homes. Each has its own neighborhood, comps, square footage? 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 haven’t been released to the public yet.
Buying a bulk reo tape: It’s not just a matter of having the bank send you a list. When the bank compiles a list of homes there are several things that must happen 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 overnight transactional funding companies can be involved. Cash, or cash equivalent and someone will verify! 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 bulk reo product. Be sure to read Part 3 coming soon.