Buying Bulk Bank REOs

Many investors have heard of bank REO's but few understand exactly what it is. Basically what the buying of bulk bank REO's entails is a bank selling of large quantities of properties. REO just stands for real estate owned. The number of properties in a bank REO is always larger than two but will often stretch above one hundred. This is a win-win deal, the banks gets to have a ton of properties of the books, while not having to list any with a dealer. At the same time it is very easy for a savvy investor to swoop in and come away with a hundred or so properties.

There a couple of different positions that someone can hold when buying bulk bank REOs. There is the end buyer (the person with the money for the purchase). There is the buyer representative, the person that is bringing the buyers offer to the table. The seller, of course, the bank trying to offload their inventory. The seller Representative is the person marketing the investments through a network of colleagues. Then there is the intermediary, this person connects the buyer rep to the seller rep. There are a lot of people who can participate in this process not just the buyers and the sellers and there is a lot of money being passed between these positions.

Looks look at some peculiar aspects and jargon of bulk buying bank REOs.

Tape

Tape is a list of properties that will come with the REOs. This is very stripped down information that will include address, bedrooms, bathrooms etc. If you are intermediary you should not hand one of these out to everyone because the fact of the matter is that if an investor sees it from someone else then you lose a lot of respectability.

NCND Agreement

There is a non compete/circumvent agreement produced to protect you spot in the transaction. The actual seller and buyer will not be required to sign one of these but all of the in-between people will be forced to sign one. This protects the individual from being bypassed at the time of the transaction.

Letter of Interest

A Letter of interest is not a legal binding document, but instead just a document that illustrates a buyer's interest in owning the tape.

Proof of Funds

When we are dealing with large amounts of funds some proof of actually having the money needs to be clearly defined before anyone gets near a transaction. This document will usually be drafted by a banker or an attorney.

Source: http://www.freefinancialtoday.com/2010/01/13/an-introduction-definitions-buying-bulk-bank-reos/, Free Financial Today