Bulk Sales of Bank REO PropertiesBy
Bank REO properties are frequently sold in bulk. Bank REO brokers who represent buyers and sellers in the REO market conduct this process.
Large banks often carry a lot of toxic assets (properties that are costing the bank money rather than earning them money) and it is vital that they rid themselves of as many of these assets as quickly as possible.
In order to do this, many banks have set in place a Bank REO Department that is tasked with unloading unwanted properties as quickly as possible. To achieve this, the bank may offer what are called REO tapes. REO tapes are Excel spreadsheets with a list of Bank REO properties. The REO Department of the bank may contact brokers who represent clients who want to buy REO tapes.
REO tapes are a one-size-fits-all type of offering, in that the prospective buyer must purchase all of the properties on the tape in bulk.
For instance, a bank might offer an REO tape with fifty properties for sale for $575,000. This means that the average cost of a real estate property on this tape is $11,500. It is the broker’s job to find a client willing to negotiate on that price.
Bank REO tapes may include properties from all around the country. Because of this, it is not unusual for a real estate investor to purchase these Bank REO properties sight unseen. Also, the investor may send representatives to do a quick inspection (drive by) of the properties in question.
Many brokers specializing in REO tape sales may represent buyers and sellers. Occasionally the broker will be selling the tape on behalf of a bank or lending institution, and other times he or she may be representing a real estate investor interested in purchasing Bank REO tapes. The broker earns their commissioner by putting together the buyer and seller from either end.
Once the two parties have reached an agreement on price, they begin the legal aspects of closing on the properties. The brokers pocket their commissions and move on to the next clients seeking to buy or sell bulk Bank REO properties.
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3rd generation real estate investor