REO properties are properties that are own by a bank or mortgage company. REO or Real Estate Owned are properties that has been through the foreclosure process and was taken back by the lender after unsuccessful auction.
Often the lender is forced to take a property to the auction to eliminate or "extinguish" junior liens against the property, otherwise the lender would have to assume the responsibility off paying of these junior liens if the homeowner gave the lender a "Deed in Lieu of Foreclosure" and walked away.
For an investor to find a good deal with REO, one need to have a better understanding of how this works.
REO's, at times are packaged as a whole and the investors should be willing to buy all the properties which are scattered from different location.
When buying in bulk, the price of REO properties is reduced, keeping it cheap for the investors. Finding the market value of each property would help in determining the purchase price of an REO.
Banks may accept an offer below the market value just to have the properties off their hands. They need to minimize their losses and this is impossible to achieve if they have several REO properties under them
The other big advantage of investing in an REO is that you have the option of inspecting the property thoroughly before you actually close the deal, which option you do not ordinarily have in a foreclosure auction. You have the liberty to walk through the property and make all sorts of inspections without annoying the seller - in this case, the bank since it will help them get rid of the property.
One thing to remember when buying an REO property. It's sold in "As IS' condition, meaning the bank will not shoulder any repairs needed and the buyer should take the property under its current condition.
Often the lender is forced to take a property to the auction to eliminate or "extinguish" junior liens against the property, otherwise the lender would have to assume the responsibility off paying of these junior liens if the homeowner gave the lender a "Deed in Lieu of Foreclosure" and walked away.
For an investor to find a good deal with REO, one need to have a better understanding of how this works.
REO's, at times are packaged as a whole and the investors should be willing to buy all the properties which are scattered from different location.
When buying in bulk, the price of REO properties is reduced, keeping it cheap for the investors. Finding the market value of each property would help in determining the purchase price of an REO.
Banks may accept an offer below the market value just to have the properties off their hands. They need to minimize their losses and this is impossible to achieve if they have several REO properties under them
The other big advantage of investing in an REO is that you have the option of inspecting the property thoroughly before you actually close the deal, which option you do not ordinarily have in a foreclosure auction. You have the liberty to walk through the property and make all sorts of inspections without annoying the seller - in this case, the bank since it will help them get rid of the property.
One thing to remember when buying an REO property. It's sold in "As IS' condition, meaning the bank will not shoulder any repairs needed and the buyer should take the property under its current condition.
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You will find helpful foreclosure and reo information, advice and tool at www.virtualrealestatetrainer.com.
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