Things are almost always cheaper when you buy in bulk. That’s the whole principle behind Costco, and you know what? That principle filters into just about every other industry, and real estate is no different. With so many foreclosures and REOs on the market, there is a movement to try and attract investors to join in a bulk sale. The question remains: is it worth it?
The answer is yes — on several conditions.
In general, bulk real estate sales mean that multiple properties are sold to a single entity, usually an investor group made up of individuals who want to take advantage of the market as it currently stands. You’ll often find that builders/lenders are flexible in negotiations when dealing with bulk sales as it reduces holding costs and risk while guaranteeing a large sum (if not all) available properties in a group get moved. Think of the savings in marketing costs and overhead if homes don’t have to be individually sold.
For REO properties, this proves to be an interesting proposition. Most, if not all, of these properties are sold below “market value”, and in sales these days, cash is king. Group investors looking to flip property can be really profitable if they navigate the market in a smart and effective manner.
Smart and effective — that’s the trick. The problem is that you’ll see a lot of advertisements fishing around for “potential investors” when really, it’s just a get-rich-quick scheme that separates you from your money. Before you join any group for bulk sales, make sure you get to know who you’re working with. It definitely helps if they have a qualified real estate agent that is experienced in both bulk sales and REO sales to negotiate things.
Make sure you protect yourself. Bulk sales can be a great opportunity but there are a lot of sharks out there looking to take advantage of well-intentioned people.
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The views published here are the opinions of the writer and are not a substitute for legal counsel.
