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How to wholesale real estate owned properties

How To Wholesale Real Estate Owned Properties

If there’s one thing that most real estate investor’s hate about bank owned homes, it has got to be their unassignability. You cannot easily wholesale real estate owned properties, or REOs, because most banks and lenders that own them prohibits buyers from assigning contracts or quickly reselling such properties to other buyers within a certain period of time.

However, just because wholesaling REOs is quite a challenge, it doesn’t necessarily mean that it can’t be done. There are certain strategies that you can use to complete an REO deal. Doing a simultaneous closing is one of them.

Doing a simultaneous closing is one of the best ways to get over a wholesale roadblock. When using such a strategy, however, you will need to enlist the services of a title company that has experience in doing such deals. This can help you ensure that you will complete all the transactions and get your assignment fee.

Going back, there are two common ways to do a simultaneous closing to wholesale real estate owned properties. The first one is called simultaneous double-closing or a “dry” closing. In a simultaneous double-closing, two separate transactions occur at the same day: A-to-B and B-to-C. A stands for the bank or lender, B stands for the investor, and C stands for the end buyer.

In the A-to-B transaction, the bank sells the REO to the investor. After the lender completes the deal with the bank, he then flips the property to the end buyer to close the B-to-C transaction. Take note that the investor is using the end buyer’s funds to close both transactions so if you’re going to use a dry closing to wholesale bank owned homes, you don’t have to bring your own money to the closing table.

The other method of doing a simultaneous closing is by using a true double-close, or “wet close.” Using wet closing to wholesale real estate owned properties is no different from using dry closing except for one aspect. Instead of using the end buyer’s money to close both deals, the investor will have to use his own funds to close the A-to-B deal.

When doing a wet close, most real estate investors secure transactional funding or bridge loans from hard money and private money lenders, especially if they don’t have enough funds to buy the REO from the bank. This way, they can get to close both A-to-B and B-to-C transactions without a snag.

Looking for more tips on wholesaling bank owned homes? Visit www.REIWired.com.

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