What is a bulk sale?
Things are almost always cheaper when you buy in bulk.That's the whole principle behind Costco, and you know what? That principlefilters 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 tryand attract investors to join in a bulk sale. The question remains: is it worthit?
The answer is yes -- on several conditions.
In general, bulk real estate sales mean that multipleproperties are sold to a single entity, usually an investor group made up ofindividuals who want to take advantage of the market as it currently stands.You'll often find that builders/lenders are flexible in negotiations whendealing with bulk sales as it reduces holding costs and risk while guaranteeinga large sum (if not all) available properties in a group get moved. Think ofthe savings in marketing costs and overhead if homes don't have to beindividually 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 propertycan be really profitable if they navigate the market in a smart and effectivemanner.
Smart and effective -- that's the trick. The problem is thatyou'll see a lot of advertisements fishing around for "potentialinvestors" when really, it's just a get-rich-quick scheme that separatesyou from your money. Before you join any group for bulk sales, make sure youget to know who you're working with. It definitely helps if they have aqualified real estate agent that is experienced in both bulk sales and REOsales to negotiate things.
Make sure you protect yourself. Bulk sales can be a greatopportunity but there are a lot of sharks out there looking to take advantageof 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.