Those of us that have been in the Real Estate Investing world for a long time have all had to deal with getting our time wasted by daisy chain deal runaround. It's very frustrating. These so-called bird-dogs or wholesalers will come to you saying that they have a list and when you spend lots of time researching you only find out at the end that this list has been passed around the country over and over. Most of the time the deals come from websites that are on the MLS or from the forums. So how do we prevent this from happening to us and how do we start making it so we don’t waste our time?
What I've learned in the past is a simple Internet search on the address is usually the easiest way to find out if this property is already listed with another wholesaler or agent. Most of these deal lists come from Linkedin groups so I typically visit my Linkedin group Real Estate Bird Dog Networks first or other wholesaler groups. Usually you’ll see the list already being marketed by somebody else or you will actually find the address on another website. Most wholesalers don’t even take the time to check they just copy and paste hoping something sticks.
The truth of the matter is that bank tapes and bank REO lists typically only come directly from banks. Bank of America and the major banks have been running auctions for years now and do them weekly and monthly and usually the minimum bid is between $500 million and $1 billion. People have to spend a lot of time, money and marketing trying to get inside the bank to get access to smaller lists or single REO’s. Once Broker gets inside the bank and directly works with the bank, the broker will be very cautious to be working with anybody who isn’t serious.
It’s in the bank interest to work with the reps that get deals sold at market value. Banks will stop working with people that are playing games or trying to get low ball offers accepted for less than market value. Having said that it is possible to find these tapes but typically you have to go directly to the bank rep or to the representative that is holding the tape. It is my opinion that these tapes although they are sold are not as common as people think compared to the amount of REO’s that are sold.
Getting direct to rep can be difficult since most the time the people that are dealing with the daisy chains will tell you that they are direct to the bank. Sometimes the easiest way to figure out if the person is really direct to the tape is to ask him a random question about one of the properties. It would make sense that a direct rep would have much knowledge on all the properties on the tape even if it were just minuet knowledge. If the person sounds uninformed or even says let me talk to my partner about that you know you may have an issue. Keep in mind that if they throw lots of hurdles your way such as making you sign an LOI up front or making you provide proof of funds before you even see a list then those are red flags.
The best wholesalers to work with are the ones that are actually on the ground. The Wholesaler all the way in New York might not really know what’s going on in the market in Long Beach, CA and vis-versa. So if a Wholesaler brings me a deal and he is in Florida and the deal is somewhere in Burbank California then I know I probably have somebody who’s just passing along the list. It’s not always the case and it’s tough to stereotype but most the time it’s true. What we try to look for in our wholesalers and bird dogs is what we call “ boots on the ground.” These people know the areas they invest in and wholesale in.