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.
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