Shadow Inventory ... A Secret Goldmine For Wholesalers!

Thanks Carol for the great information. It is always great to get tips from Dean's successful students.It really helps us to keep going and believe in ourselves that we can do it too!

Buying a property in an LLC and then selling the LLC as opposed to selling the property is an effective way to get around the 90 day flip rule as well. Or the buy and hold for 1 year rule Fannie Mae requires with their properties. JUST FYI

That's awesome information, I'll try calling those banks and negotiating with them. Thanks for all your input, Carol.
Dennis

I tried to add you on FB about a year ago and still am not your friend. I had wanted to get in contact with you about a deal I had a few times. Would love to work with you sometime! I'm wholesaling now too!

Great info on the management companies! Another in with the asset managers are the escrow companies. They work with a lot of them. That's how I finally broke into the connections for some off market REOs.

Also, selling an LLC is a way around it, or taking property in a trust. What we do in CA is simply add the buyer to the contract and they take our place on the contract as 'our partner'. Gotta think outside the box... and the rules!

Carol can you tell me where I would be able to get an NCND ( Non Disclosure Non Circumvent)contract. So I can have my buyers sign it and I dont have to worry about them going around me. This would help a lot!!

I also need to know where I can get a copy of pdf of the NCND ( Non Disclosure Non Circumvent) agreement. Thanks in advance!

for that added information on LLC's. What if the bank wants a rep there when you first view, is there any problems you forsee with that?

I have been reading about this, and am making this my next plan of attact! Any Suggestions?

Great information! When I drive the neighborhoods and see the signs in the windows of these vacant homes I just assumed that the bank was in the process of dealing with these via foreclosure. I'm definitely going to put your information to action! Thanks again!

Hello,

I have a long list of shadow inventory. The problem I am facing is findin the bank the actually owns the property. The ones that have been winterized have a different company sticker on them and some say do not contact about offers. Any tips would be greatly appreciated. We are still working to get our first deal done, but I know it will come soon. : )

Thank you,

Jenn

Thanks so much for your very informative post!
So much great info!

Leilani

Thank you Carol!
Based on your article here,I took some time today and went cruising through a few of the nice neighborhoods in town, looking for those unlisted, unmarked houses that you called "Shadow inventory". I found at least 4, plus 2 more that look as though they've been abandoned, and several that might fall into that same "shadow inventory" category, if only because there are tags in the windows, but no signs currently in the front yards. I'm looking up taxation info on the assessor's site for them now so I have some real numbers to work with, and not somebody's "pie in the sky" idea of what they are worth.

Now I just need to find the cash buyers for them!

Moving forward, step by step. I WILL NOT FAIL.

You state, "now I just need to find buyers for them". Actually you need to find out how to put them under contract. Then you can flip them to a buyer, providing there are no seasoning issues.

Michael Mangham
MD Home Acq1uisitions LLC

After bombarding Deutsche Bank with faxes, the shadow property I have been pursuing for 6 months has now shown up with a property disposition company back east. Calling the number listed on the notice in the window landed me with a call center in India telling me that the property is not in their system and I must have the wrong address. Tried calling the company contracted to maintain the property and they referred me to the property disposition company. There is now a lock box on the property but the property doesn't show up in the MLS. I have emailed the property disposition company and explained my situation telling them I have the address right, maybe they input it in their system incorrectly. I just hope my email gets read by someone in the U.S. rather than India.

I have had Dean's book for about a year, cannot seen to get (cash investors)so have done no deals. However still reading and this seems like a way I could get into this. My question is: Is there any reason this would not work with the average Joe; who has gotten his loan all set up, just needs to find the property?
Please let me know if you can think of any reason this would not work or if there is anything different I would need to do to make it work. I will be looking to see what your answer is, I have located 3 properties that (I think) will work with; I haven't put any signs or craigslist ads up yet till I hear from you.
Have a good day.

Pattison

What I wonder is how a person convinces a potential buyer to let someone else do the negotiating for them. What's to stop them going to the bank themselves? Any thoughts on this, anyone?
I'm very new here, and I'm feeling a little discouraged, so finding Carole's post is a real morale booster for me. Brilliant tip! Thank you, Carole.
I'm really looking forward to hearing what you have to say about pinballdan's post, and mine. I live less than a hundred miles away, so I'm in the same boat. I figure that if someone who lives around here finds a way to make it work, then so can I.
I will be watching with much interest, and feel a little better already.

I have also tried calling bank phone numbers found on the window stickers and flyers. The best information I have received from these phone numbers is an approximate date when the properties will be listed on the MLS. And in all cases, there was a waiting period for investors.
Although, there is this one property I know of that was listed twice and had to be pulled off the market because of incorrect discription langauage in the offical survey. That could be worth a call.
Thanks DG members. Happy Thanksgiving!
Bill from Minnesota

You most likely already know this, but when you find a vacant property that is not listed yet but has a lock box on it the lender has contacted the listing agent and asked them to secure the property. The listing agent is now waiting on the listing agreement from the lender. After they receive the listing agreement the property will be listed on the MLS with in 48 hours. They will then consider offers but usually take offers for several days to reach highest and best offer. That is how the so called shadow inventory becomes available to the investor in the real world.

Bill, you are experiencing this first hand. You are not going to be able to offer until it is listed. Just like you said.
You may be able to talk directly to the asset manager at a very small bank or credit union that has 2 REOs, right? Can't base a business on buying REOs directly from a small bank. Their inventory is to small.

To all: PM me if you want to set up a REAL system for offering on REOs.

Michael Mangham
MD Home Acquisitions LLC

Now I can see why a buy would want to let us negotiate for them. If we can get through to an asset manager, we'll have done something they won't know how to do - and specialized knowledge deserves to be rewarded.

excellent

I am writing this because I see a problem with this post being misleading. Carol, can I ask how many have you done of these? I've read through your post and you state that you should tell the banks you are a cash buyer. Would you recommend telling others this even if you really don't have cash? That would be called lying. Secondly, contacting banks about a single property to someone who calls randomly especially to mid-large size banks is almost impossible. I just feel bad for the people who are trying to do this only to get shot back down. For everyone who is really trying to make it in this business, you need the big bucks to buy reo's directly through the banks and that is called bulk reos. Other than that, make relationships with reo agents and they will help with you success. I would not take Carols advice on driving around finding these houses with winterized notes etc, it will just waste gas, time and cause many headaches. Good luck!

Now with the lock box on the property I am pursuing it is now even farther out of reach. No link to who placed the lock box, people who cleaned up the property have been no help, property is not on the mls or the web site of the property disposition company. A call to the property disposition company yields a call center in India telling me I don't have the correct address. Emails to the property disposition company have yielded no response. Might work better with small community banks....tough going with the big banks. A local investor said I should have faxed a purchase contract with a copy of a cashiers check for the offer price to Deutsche Bank initially to get their attention. Look at it this way....if it was easy, everyone would be doing it. The problem is, the banks are so confused they don't know who has what and where it is. When I refinanced my house last year, it took them 10 months to get me a copy of my previous note that was paid off with the refi.

thanks carol ... now i feel more able to walk into a bank and talk to them!
question ...could it just be easier to walk into a bank instead of driving around and just ask for the "shadow" properties list?

... OH BY THE WAY A LINKEDIN CONNECTION REQUEST WAS SENT CAROL!