REO: Finding the Great White Whale

By
Services for Real Estate Pros with United Home Sites Inc.

Finding the Great White Whale is important to me. I have spent some time now working with buyers and sellers in the REO bank owned properties arena.  The Great White Whale is the infamous twenty billion dollar tape. Finding a legitimate product under 1 billion dollars is not hard. There are many REO tapes in this range that are legitimate and will go to closing. 

Those of us that have been in the industry long enough realize there are many people we call  intermediaries doing the same thing; Chasing the Great White Whale. Many also realize that the actual players in the game do not exist in high number. Believe it or not there are many intermediaries that believe that packages from 20 billion dollars and upwards of 800 billion dollars exist. To those that do believe these packages exist. Show Me. I have yet to see a package over 500 million close, let alone one at 500 billion.

 In this industry the intermediaries chase a dream that can change their life in an instant by simply getting 1% of 100 billion dollars. Soon they find that even if they could make this deal happen there are  twenty intermediaries they have to split the money with. You would be surprised at the amount of people that don’t want one twentieth of one percent of one billion dollars. Five hundred thousand dollars is not enough to make them happy for doing little or nothing.

The game is fairly simple. Put the buyer with the seller and close the deal.

Well the buyer will not release their proof of funds until the seller provides proof of goods. This would seem simple enough to most, you would think. The facts are it isn’t that simple. The problem and the solution lie in one thing. Intermediaries.

Intermediaries are to play a crucial role in the process.  I find most of the intermediaries have no clue what their role is or even how a transaction takes place. They spend little or no time studying  up on the process, the problems or the solutions. They jump in feet first with no due diligence expecting to look professional and close a billion dollar deal when they have not even closed a small deal. I guess I am to get in a plane and fly it with no prior training. If you got on the plane today and I was the pilot and this was my first flight. Would you stay on the plane? Oh! but you expect someone with a billion dollars to let you spend their money. I’m sure that’s how they got rich.

The Great White Whale that is a thing of beauty. Just think, you are in the real estate industry and the bubble bursts. You had been making great money. Things were looking up. Now what, I have to support my family and no one is buying.

If you were like me you got pulled into this by the sound of making billion dollar deals. I have made million dollar deals. I am a real believer that when one door shuts another opens. When I found I could take the REO tapes, sell them to one of my clients who are buying and I could make one point on 20 billion dollars; I could not pass up this opportunity.

I have been in the industry for over ten years and have made millions of dollars for investors. I have many connections. As I started calling people I found that many of them were working with hedge funds since the market dropped out. Everything pointed to me being on the correct path. When you have a buyer that says they have twenty billion dollars to spend on REO tapes, oh, you listen.

Needless to say we all have buyers in this industry that can buy. But where are these tapes? There are many things that intrigue me at this point. The sellers say they have REO tapes 20, 30, 550 billion dollars. What?! I have buyers. Send me that tape! You are excited the deal is there it will all come together.

No, the seller will only proof up after the buyer mandate proofs up.

Now we spend the time to convince your legitimate buyer that you have the access to get them what they want but they have to provide proof of funds. The funds are to be in escrow. It is my belief that if you have 20 billion dollars you are not going to let it set in an escrow account and let it loose the interest that you could be earning. So you have your buyer move their money into an escrow account and proof up. Now you know this transaction will happen. You have provided everything that you were asked for. Then you are told “I’m sorry we need a fee agreement put in place to protect all of the intermediaries”.  When you get this paperwork you notice that none of them have signed it and except you to have everyone including the mandate sign and return it to the intermediary (notice you are not sending it directly to the mandate).

 Fortunately for me I have good contacts that I have done business with and they are loyal. On the first transaction that I attempted to bring together the intermediary immediately called my mandate and tried to cut me out of the deal. This is what the majority of these people are trying to do out here. They are trying to shop for mandates on the buying and selling sides of the coin.

The facts are simple to me. If you had a billion dollars would you rely on someone with no real experience to help you find someone to sell a billion dollar product? Most people or companies that have that kind of buying power know the people with that kind of selling power. What you will find is that this industry is very small but gets the perception of being very big by all of the intermediaries that are trying to play the game. One of the biggest things that seem to be over looked is that there are no banks out there doing packages over one billion dollars.

So if packages do exist in the twenty billion range it would require what is called a compiler. A compiler takes packages from multiple sources and compiles them together to make bigger packages.

Ask yourself this question. How can they get the price down as low as they do if they are buying smaller packages that typically sell for more? The only way I can see this happening is if the compiler has access to the bank directly and the bank in fact is letting them take down one billion dollars a day and guarantees a takedown of a certain total amount. I am not claiming this is not how it is working but like I said before “show me the product”.

I would like to conclude by saying this. I have been in real estate for years and have met many good people along the way. Never in my years have I had to endure such crooked, lying people as I have had to in the REO industry. I have had lawyers write letters guaranteeing a sellers product under penalty of perjury who have never spoken to the seller. I have had people say they were the mandate only to find that they are just intermediaries saying they are the mandate. Ask them for a letter of authorization and you will be lucky to hear from them again. The ones you do hear from will just ask for proof of funds. If you are dealing with a real mandate, buyer or seller you will find that they have no problem releasing information. You will get proof of funds, letter of authorization, and an actual REO tape. If you are dealing with an intermediary you will be asked for everything under the sun and get nothing in return.

My company in conjunction with affiliate companies have come up with solutions for all of these problems and would love to hear from actual buyers, sellers, and mandates with letters of authorization.

Please, if you are an intermediary no matter how close you are to the buyer or seller do not apply.

If you do find the Great White Wale don’t hesitate to call. I don’t necessarily need to catch one I would just like to see one.

I hope this helps a few people save some time.

Wayne Money

Http://unitedhomesites.com

Comments (14)

Mark Archer
Fathom Realty - Glendale, AZ
Realtor,
Amen..... I couldn't agree more. You should call me as I am in the same game as you. Maybe we can help each other out. I got a chuckle out of your post......
Mar 08, 2008 02:13 PM
Anonymous
JP

I found your blog to be exactly (a day in the life) of  putting these type deals together. I am an intermediate/or Buyers agent if you will, and I have a very close friend that I have done some smaller deals with in the past and as you pointed out he is wanting to sink billions of his and his groups money into the REO market compared with the Wall Street alternatives. So he has charged me with finding them NY Tape, not only because he trust me with his life but more about taking care of me in a sense for the millions of dollars he has probably made through me. I have found that you are correct when you think your dealing with the mandate and they start asking for this and then that, next week its something else. I cant understand what is the problem with putting me in touch with the real mandate. At this rate maybe I'll find what I'm looking for when my buyer decides to put his money somewhere else. Its very frustrating

Any tips on going to banks directly for multi-billion dollar tape or even 1 billion $ Tape Anyone? 

 

J.P 

Mar 10, 2008 06:03 PM
#2
Anonymous
Lenska

I am a NEWBEE in RE and was approached by an investor group to train as a bird dog to find these  tapes. I am just wondering why people with all that money and being in the real estate industry for years don't have a business banker who can put them in touch with the REO department direct rather than putting on seminars? Would Donald Trump work through an intermediary? Iappreciate your wise input since I don't want to waste my time looking for even a small whale...

Jun 27, 2008 08:01 AM
#3
Anonymous
Premium Finance Group

We have tapes in NY!  Call me 201 707-3879

Sep 06, 2008 06:14 AM
#4
Anonymous
KN

I have that great white whale.  (310) 598-3944.

Sep 15, 2008 08:45 AM
#5
Anonymous
Rusty

Interesting yet you want only buyers or sellers or their direct mandate, that would make you the intermediary - the ones you wont speak to?

hmmm that would make this an add and not information that is not bias. Some truth and some slant. Motives are askew I believe. And I do not believe their is a 10 billion dollar tape unless you count the buyout of countrywide by BoA as setting the price at 23 cents.

Sep 16, 2008 03:51 PM
#6
Anonymous
jay

Hi everyone I just finish a big REO deal. So Im looking to buy REOS for my self. Im looking for a sellers mandate or the seller him/her self. I will only talk to them. IM THE BUYER.

Contact jwalsh310@gmail.com

Thanks
Jay Walsh

Nov 22, 2008 11:21 AM
#7
Anonymous
George Wagner

I work for a Bulk REO Clearing Company - we sell product for about 10 major banks. The largest tape I have seen is @ 100MM. I did see a GMAC tape that was 1,2B PBO with an asking price of 335MM... but banks do not hold inventory into the Billions. They put their aged REO inventory up for bid through Clearing Companies every 90-120 days.

If you want to read about how the process really works, check out my site http://www.bulkreotape.com

Dec 11, 2008 11:09 AM
#8
Anonymous
Gary Choynowski - Bard Funding Group

I was about to write a similar blog entries but decided to do a search first.  I'm happy I did.  In a way it was nice to see that we are not the only company  feeling the frustrations and anxiety of Bulk REO business and the process.

At first our company dealt with specific banks and the tapes they would provide.  We would bundle, escrow pick and prod.

But today it's different.  It took us months of negotiations, hammering, screaming and spending, but we did find the Great White Whale - the platform to Fannie Mae Freddie Mac.  This platform is run by a Trust for Fannie Mae that gives Seller Mandate (like my company) access to all inventory (properties, notes, cmo s, npn, pn, etc.) inside of Fannie  Freddie and the federally chartered banks that fall under their umbrella (which is pretty much all of them).

While things do not change, as Wayne has beautifully stated above, so do they change.  Now, we get to create custom tapes, we get to build those Billion dollar deals (which we have closed, by the way!) and we get to do it with as much detail as investors want to give (state, city, zip code sfr, commercial, etc., etc., etc.)

While REO in bulk is not a new business, the shear scope of today's market is.

So Wayne, like you, we have searched for the Great White Whale, too: We found it, we swim with it, and the water is just fine.

Let me know if there is anything we can do to work together.

Dec 22, 2008 11:17 PM
#9
Anonymous
REOBULKinUSA

All this is very interesting.  I've been in the Real Estate business for over 18 years, and what I have seen in the last 8 years is sickening. Why don't you pretenders go back to bartending, used car selling, etc.  I 'm  glad the bubble finally burst, this correction was sorely needed.  But back to the topic at hand.  This REO-BULK business is very interesting.  Everyone claims to have 20-50-100 million, they swear they have the money but they all want to see the tapes before they proof up.  After spending time playing their game you find they have credit lines.  I've made the decision long ago, that before I deal with anyone, I need a few items upfront:        

1. NCND 2. LOI 3. REO Order form

From these items I try to match product with their needs.  I do this before any proofing of funds.  This is a quick process and allow me to quickly engage buyers whose need I can fulfill.  Its works wonderfully and is very successful.  We are incredibly busy, and I feel lucky to be in this business.  Fortuantely I've been able to develop a relationship with the seller mandate that is at the most, one away, which gives me a huge advantage over all the posers.  Good luck finding the Great White Whale.

Jan 14, 2009 04:24 AM
#10
Anonymous
Paul Dehaney

Its sounds good i am a realtor for 8 years in the new york and one of a few realtors who really buy and sells reo my problem is i cant get enough quality stuff to sell or buy i sell 1million per month small but it pays the bill i have 10 million right now and looking to spend it every month anyone with reo in the new york area hit me up i am will give you proof of funds.

Apr 15, 2009 12:03 PM
#11
Anonymous
Paul Deahney
 

Its sounds good i am a realtor for 8 years in the new york and one of a few realtors who really buy and sells reo my problem is i cant get enough quality stuff tosell or buy i sell 1million per month small but it pays the bill i have 10 million right now and looking to spend it every month anyone with reo in the new york area hit me up i am will give you proof of funds.

wallstreetras@yahoo.com

 

 

 

Apr 15, 2009 12:08 PM
#12
Anonymous
Michael Kosh

My name is Michael Kosh, I am an investor with Kingdom Investments
LLC. My primary business is Residential & Commercial Short Sale
Acquisition and Bulk REO sales. I am NOT part of a daisy chain. We
will also provide property value information assessed within the last
30 days for each property.

I specialize in:

Ø Custom Orders Nationwide

Ø Bulk REOs .20 -.50 cents on the dollar

Ø Tapes available in 48-72 hours

Ø NPN .20 cents on the dollar

Ø PN .40 cents on the dollar

My REO Sources include:

Ø FDIC

Ø Fannie Mae/Freddie Mac

Ø Hedge Fund Managers

Ø US Treasury

Ø Private Investors

Ø JP Morgan Chase

Please contact me for more information.

Michael Kosh

Kingdom Investments LLC

mikekoshu1st@gmail.com

Jan 11, 2010 04:51 PM
#13
Anonymous
John

I just recently got screwed by the IM's saying that they can get product, instead they took my client away. I don't trust IM's. Most of them are full of crap. I am looking for direct seller only. I have investors that are looking into buy REO tapes $500M - $10B. Please contact me if you deal direct to the seller.

 

Thank

John

John@avaloncdl.com

Jul 22, 2010 12:14 PM
#15