It’s a common misconception for new investors that bank owned properties (REO as they are referred to in the business) are the cheapest and easiest way to find distressed properties. The truth is quite the opposite. Ten years ago I took a one day class on real estate foreclosures because I was certain that banks were giving houses away to investors like myself who had the right connections. I completed the course and devised a plan to build relationships with REO brokers who would give me first dibs on any of these deals. My girlfriend at the time even went so far as to get licensed as a real estate agent so she could work at the premier REO brokerage on Long Island. We would have the inside track on all the deals and she would get commission when I bought and when I sold. Great plan right? In theory yes, but in reality it was anything but.
So why didn’t this plan work?
A number of reasons. First, by the time a property becomes bank owned the bank has already taken a significant loss and is looking to minimize their downside. Selling properties to investors at a discount only hurts them further. Second, most banks require properties be listed on the MLS, auction sites, and more to give them maximum exposure. Many banks go as far as to require a property to be publicly marketed for a minimum number of days before any offer can be accepted. Lastly, REO brokers aren’t willing to risk a bank relationship that took them years to cultivate. So the odds of them steering a deal in your direction is slim to none and slim just ran away. The truth is that bank owned properties are usually the most overpriced properties an investor can buy.
What can investors do to generate quality leads to purchased distressed assets ?
Simple, you need to generate a comprehensive marketing strategy and be consistent with it to find deals of people that want to sell my house fast Long Island. How involved the strategy becomes depends on how much business and the type of business you’d like to do. Marketing strategies include networking, TV, radio, mailers, cold calling, driving for dollars, organic social media, paid social media, PPC, SEM, events, sponsorships, and more. The more exposure you have the more opportunity you’ll get. For more creative real estate marketing ideas see the attached video
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