5 Benefits of Working Private Seller Deals vs REOs

The 5 Benefits of Working with Privates Sellers vs. REOs.

1.       Rapport – Human beings like doing business with people they like. This is science not just talk, look up NLP. Working with a private seller forces investors to show up, present themselves, and be in direct contact. Having good rapport with the seller gives the investor a psychological edge that cannot be had with a bank.

2.       Control – When working with private sellers, the investor has more control when it comes to setting the various terms of the agreement.  When submitting an offer to a bank however, they will send their addendums for what they want. Every bank has different inspection contingencies such as down payment requirements, closing costs, Title Company and so on. Setting the terms is very important to investors, especially wholesalers. Oh and banks do not allow investors to assign contracts, that’s a biggie!

3.       Negotiating – Unless it is a short sale, the bank rarely is open to negotiations on its REOs.  This does not mean they won’t entertain your offer, but unless it’s within 90% of its asking price, it is unlikely to be accepted right away.  Low ball offers will be considered by a bank only after a few months of being listed with not activity. Private sellers may not be as firm and will more likely entertain creative ways to get a deal done such as a lease option or land contract.

4.       The Closing – This is basically for investors who wholesale. When flipping a bank REO, investors will need cash to close on the A to B transaction. If the investor does not use their own money and borrows transactional funds, they will need to pay the closing on 2 transactions, plus a % of the money borrowed to do so. The double close can get pricey and you must have enough spread in the deal to make money. A closing with a private seller goes a lot smoother with all your doing is assigning a contract over to a seller.

5.       Competition – The MLS is the best source for investors and their agents to find property. If an investor is working a hot area, they will most likely have that area on lock using the MLS. On the other hand, if you have a private seller deal within that same hot area, your competition is a lot less because investors rely heavily on MLS to find deals. Yeah it takes a bit more work to find them, but when investors do, they have a great chance of hitting one out the park.

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One Person has left comments on this post

» Ban said: { Dec 23, 2010 - 11:12:17 }

Very good info!!!