Re: What is N.P.L National property liquidators - Posted by Matt in Indy
Posted by Matt in Indy on July 26, 2005 at 09:55:52:
I have not applied with NPL yet, but judging from what I’ve read in this very long thread, I can make an educated guess. IMHO, NPL makes agreements with local builders to facilitate the sale (note, I did not say “buy”) of some of the builders’ inventory, probably either the first houses built or the last to sell, which are traditionally the most difficult for a builder to sell. Most likely, they acquire an option to buy at a certain price. NPL then turns around and provides these houses to their list of investors to buy. They make money on the difference between what discount the builder gives them and what the investor is paying.
Also, I believe they provide a tenant/buyer and would most likely make some sort of commission on this transaction as well.
So by doing this, rather than having to have millions of dollars in cash or credit to buy up all these houses, they can instead “sell” them to investors and make what is essentially a commission or transaction fee on each one.
Think about it, could any of us go out and buy dozens of brand new houses right now? I know I can’t. However, if I had 20 houses right now that I had an agreement to get for 25% under value, could I sell 1 of those houses to 20 different investors for 20% under value and make a lot of money? Absolutely! I make 5%, each investor has 20% equity, the builder has sold all the houses. Everybody wins!
Now, I don’t know if this is in fact how they’re operating, but it does make sense to me and could answer the question of why don’t they do it themselves. Also, they may in fact actually purchase some of the houses and keep them themselves and provide the remainder to investors. So what if they do? I know of an agent who does this type of thing with HUD foreclosures here in Indianapolis. He can’t possibly buy all the HUD foreclosure deals he finds, so he’ll buy as many as he can and then broker some to investors he has lined up. He makes commission money, the investor gets a deal, HUD sell the house, everybody’s happy!
James Hull, do you think this is how NPL is operating? I would very much like to know. Thanks!
–Matt in Indy