REO Properties and Bank Foreclosures
Whether you're seeking a new home or a second one, or are seriously considering beginning investments in real estate property, you'll quickly find out that there are many options available to you. From standard purchase options to auctions, there are more possibilities with every passing day. You may have not yet considered bank REO sales.
Bank owned property sales occur when a bank is unsuccessful in selling bank foreclosures at auction. This usually happens because the value of these properties is less than the amount owed to the bank. In such a case, the bank will attempt to sell a property without auction, generally at a lower price. This is usually done by employing a realtor to sell the property.
When buying foreclosure properties, make sure to pay close attention to the state of the property you are buying. Many foreclosure properties, although they have low prices, are in need of repairs or maintenance. In many cases, these repairs may be easily done without cutting too much into your profit margin, but there will be some properties you will want to pass up because the associated repairs are too costly. Be prudent but also don't be afraid of the repairs because that's often where the big profits lie.
There are several places that a prospective or current investor may find bank owned properties. First of all, banks themselves often have search tools on their web sites where you may search for a property in your location, or the location you are interested in. These sites generally let you filter your search by price, amenities, and other factors.
Third party listings are also a good source to find countrywide REO properties. There are a multitude of independent and third party websites that will also give information about these properties to you. As always, be careful with these web sites. Most sites are legitimate, but not all. Use careful judgment when using third party listings.
Once you make an offer on a REO property you can expect the bank to make a counter offer. Allow yourself room to bargain to ensure you receive a price that is acceptable. While negotiating, mention any repairs to the property that you may be considering. Upon buying, you will receive a policy for title insurance. Take care not to become so obsessed with a particular property that you end up paying full price. Take your time, be patient, review the facts and you'll come out on top.
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As a real estate investor you must ensure you have good sources for generating profitable deals if you are to be successful. Bank foreclosures are very attractive right now because there is so much supply which forces the already low prices down further. However, you should know that REO properties can be even more attractive. If a bank fails to sell their foreclosures at auction, the property is then an REO property (owned by the bank). This puts a lot more pressure on the bank to sell the property because now it is a big fat expense.
Published November 17th, 2007
Filed in Business, Career, Real Estate
