Real Estate Investing Blog - DiscountedProperties.com

You may be familiar with the term “wholesale real estate,” which is used to describe distressed properties that are bought, rehabbed and then sold. However, what exactly is wholesale real estate, and how can you find these properties?

Wholesale Real Estate 101

Wholesale real estate is a general term used to define real estate that is owned by motivated sellers looking to unload their properties. A wholesale property may need extensive repairs, may have a notice of default, or may be REO or bank-owned.

Examples of wholesale property include:

* The homeowner misses several mortgage payments and wants to sell quickly before the bank sends him a notice of default.

* The property is in a state of disrepair, and the seller wants to move without performing any of the repairs.

* The homeowner is motivated to sell because of a move or job transfer.

As a real estate wholesaler, your job would be to locate these wholesale properties via various networking tools. If you want to wholesale real estate, you will likely need to become involved in real estate investing clubs and online sources, just to name a few.

Wholesale real estate may provide a great opportunity for many investors in today’s tough housing market, provided they have a good working knowledge of real estate laws, trends and finances, and can successfully market and sell wholesale property.

Important Elements of Wholesale Real Estate to Understand

However, before you can successfully find, purchase, and sell wholesale property, it is important to keep the following in mind:

* You will need to understand the local and regional markets and be willing to spend the time searching for properties with motivated or distressed sellers.

* You will need to be able to negotiate deals with sellers that are looking to move quickly but still want a fair price for their home.

* You will want to assemble a list of investors willing to purchase wholesale property from you (there are many investors interested in purchasing wholesale real estate but do not want to take the time looking for the properties – this may prove to be very lucrative to you!).

* You will want to network and work together with other wholesalers. This is often the key to wholesaling real estate, as the larger the network of buyers and sellers, the better off you will be when it comes time to selling your wholesale property.

Now may be the ideal time to take advantage of the wholesale real estate market. It is important, however, to educate yourself on how to wholesale property before embarking upon this real estate investing journey.

Bank-owned homes, also known as real-estate-owned or REO properties, are homes which are owned by banks as a result of the foreclosure process. With the glum state of the nation’s real estate market, there are certainly plenty of opportunities for both investors and homeowners seeking REO properties.

Because most lenders have far too many of these REO properties on their books, they are anxious to sell them, often for below fair market value. Bank owned homes could be a prime opportunity for both investors and homeowners, so it is up to you to educate yourself on the many facets of REO properties!

What is the Difference between REO Properties and Foreclosures?

REO properties are properties that are returned to the lender if a foreclosure auction is unsuccessful. If the property does not sell for what is owed to the lender at the foreclosure auction, the property is then returned to the bank, where it becomes a bank-owned property.
A lender will seek to sell the bank owned property to recover their expenses after it is returned to them, including the unpaid loan amount. The lender will also clear the title and perform any necessary repairs before selling the home.

Are Bank-Owned Homes a Good Investment?

Many buyers assume that REO properties are great values, and therefore get caught up in a bidding war and end up paying too much. Take into consideration the condition of the home and the home values of the neighborhood before bidding on bank-owned properties.
How do you Purchase REO Properties?

Bank-owned properties are sold in a similar manner as traditional homes, except that you are making an offer to a bank, not a home seller. Once again, keep in mind that you won’t usually get a “steal” when it comes to REO properties, as the bank is looking to recoup its expenses and the home’s unpaid loan amount.

Many banks have REO departments that handle bank-owned homes. Once you have submitted an offer to the bank, they will likely submit a counter offer. Your final offer will likely be reviewed and approved by several members of the REO department.

Can I Negotiate Home Repairs with the Lender?

Most lenders look to sell bank-owned homes “as-is.” In other words, you will likely have very little room to negotiate repair costs with the lender. However, most lenders will allow you to have inspections on REO properties so you know what repair costs you may face.

It is therefore important to stipulate in the offer that you have the option of cancelling the contract if you find extensive repair costs that the bank won’t cover.

Bank owned homes can be an excellent investment, especially if you purchase one that does not require extensive repairs. However, make sure you analyze bank owned homes as you would any other property – with rationality and practicality.