How to Wholesale REO and Bank-Owned Properties
Strategies for acquiring and wholesaling bank-owned properties — navigating bank processes, restrictions, and closing requirements.
What Are REO Properties?
REO (Real Estate Owned) properties are bank-owned — the bank foreclosed and now holds the title. Banks are not in the business of owning real estate, so they're motivated to sell.
The Challenge for Wholesalers
Most bank REO contracts prohibit assignment. The bank's addendum typically includes language preventing you from assigning your purchase agreement to a third party. This means standard wholesale assignment won't work.
Solution: Double Close
Use a double closing instead of assignment. You actually purchase the property from the bank (Transaction A-B), then immediately resell to your end buyer (Transaction B-C). Use transactional funding for the brief period you own the property.
Finding REO Properties
MLS listings (most REOs are listed with agents), HomePath (Fannie Mae), HomeSteps (Freddie Mac), HUD HomeStore, and direct relationships with bank REO departments and asset management companies.
Making Offers on REOs
Banks want clean offers: proof of funds or pre-approval, quick closing timeline, minimal contingencies, and professional presentation through the listing agent. Submit through the bank's designated channels.
Key Differences From Standard Wholesale
- Longer response times (3-10 business days for bank decisions)
- Bank addendums override your contract terms
- As-is sales with no repairs from the bank
- Inspection periods may be shortened
- Double close costs ($3,000-7,000) must be factored into your deal analysis
The Bottom Line
REO wholesaling requires double closing instead of assignment, but the deals are real — banks are motivated sellers with large inventories. Budget for double close costs and work with title companies experienced in back-to-back transactions.
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