Notes, Bulk REO, Commodities Deals are Very Murky

Lender REO (foreclosed properties): 393 $6.7B
Troubled loans (usually missed at least one payment): 1,453 $38.4B
Potentially troubled loans (difficult to refinance): 3,428 $79.4B
Total: * As of Feb. 24, 2009: 5,274 $124.7B
Source: Real Capital Analytics

If you have been trying to do deals in bulk REO, Oil or other commodities you have come across problems with buyer and seller mandates. I believe that most of the deals out there are crap and that neither the seller nor buyers are for the most part real. I call the open market "Cowboy Country". Everyone seems to have a gun, but nobody seems to have any bullets.

Recently in an article in National Real Estate Developer there was a story named "Trading distressed Debt Gets Murky"

This article talks about the problems with buyers and their agents. Many of the agents do cannot answer the right questions of their buyers or they don't have the ability to pull the trigger, but refuse to give their buyers information out so there is no way to truly consummate a deal.

I know I will get much feedback about My Buyer is Real.... forget about it. Maybe yes, maybe no... The truth is I have worked on bulk REO and Oil deals for several years and I have seen it all. Many good friends have lost their businesses and reputations and they swore up to the last minute that they were dealing with the REAL THING.

First there are no seller agents if the seller is a bank. NO banks I know of will sign a letter that gives an outside party the ability to deal on their behalf. If the seller is private then maybe, but don't tell me you are direct to banks. That really doesn't mean much. There are independents like Second Market and Debtx that will charge fees on both sides to confirm sources and deals.

My recommendation if you are a seller doubt highly any claims by a buyers representative. There are, for buyers, just as many, if not more reasons to doubt the seller also. Since no one wants to ever blink first then I would say stay out of these deals unless you really know who you are working with.

Use the pros at Debtx or Second Market, otherwise do a lot of due diligence.

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