What happens when homes go to foreclosure and have to be bought back by the bank? They become REO properties. Real Estate Owned properties are a large issue for lenders as they are not in business to owns. They are not in business to manage properties or in business to keep them up or in business to market and sell homes. They are in business to lend money.
It is commonly understood then that homes that have been foreclosed on by the bank and actually bought by the bank at the auction that they must be sold or liquidated in some way or another. Step in to the Bulk REO sales world. It is a world of multi-million dollar deals with all types of disclosures happening all the time. Especially these day with these, 7 million dollar shadow inventory that is supposedly looming out their on the lender’s books, there is a lot of inventor and the banks are trying to move them quickly. Funds of all types are getting together with large lenders to relieve them of their assets in the move to get rid of their fund money as they are not paid to sit on their investor’s money either.
Now, don’t be readying up to buy your Yatch and Plane just yet. These deals, for most, rarely close as their a large amount of people out there either falsifying their connection to a buyer and those sellers putting out faux lists in search for someone who actually has the money. It is almost like other industries where 4% of the work force actually does 96% of the business. Ultimately though the industry will continue to be ravaged by people talking a talk that they have no intention to walk.
Recently, we received 5 packages that were sent out by Wells Fargo Home Mortgage. They are asking for about 1% of the package size as a down payment prior to commencement of the bidding beginning to be placed in escrow. The buyer that is the successful bidder will wire the difference from the initial deposit put in to escrow and the purchase price at closing. Wells Fargo Bank N.A. has stated that if the buyer who is the successful bidder does not proceed with the closing, Wells Fargo retains the deposit for “liquidated damages.” For all the buyer who do not successfully have an accepted bid, the initial deposit, without interest, will be returned to the buyer by the following business day.
These banks are up for some pretty serious business as the rest of the contract goes on for several more pages. These are some of their Quick Facts:
- Each portfolio will consist of REO properties available as a package. The buyer may not remove any properties from the package. The seller reserves the right to remove a property from the portfolio if necessary.
- Each potential buyer will be provided a list of assets which will include the property i.d. #, property address, property type, current BPO value, and realtor contact information.
- Each buyer will have a seven day due diligence period to ascertain the information necessary before submitting a bid. Bid amount is to include $450.00 per property for recordation of deed and realtor fee.
- If interested in receiving a list of the properties in the upcoming bulk sale, a registration form, signed letter of intent, and earnest money deposit must be submitted by the due date identified above.
- Properties are sold as is. Title will be transferred via quit claim deed or equivalent.
Many of these deals have closed and are for real. They happen behind closed door and you need to know the right people to get involved. Keep your eyes and ear peeled because we are sure that many of these will be coming down the pipeline in the years to come.