REO Properties and Bank Foreclosures
Whether you are searching for a new home, a second home or seriously considering real estate as an investment, you will find there are different options available to you. These choices can include traditional home buying, purchasing through an auction and many other possibilities. One alternative you may not have considered is bank owned property.
Bank owned property sales occur when a bank was not successful in selling a bank foreclosure property at auction. This normally takes place when the value of the property is less than the amount that is owed to the bank. In this situation, the bank will attempt to sell the property without an auction and often at a lower price. This type of transaction is usually completed by hiring a realtor or sometimes through another auction.
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.
When you make an offer on a real estate owned property, the bank will usually make a counter offer. Plan for some bargaining to get a price that is acceptable to you. While negotiating, be sure to mention any repairs that are needed. Upon buying, you will get a policy for title insurance. Above all, do not fall into the trap of being so fixated on a particular property that you end up paying full price or more. Think things through, and you'll be set.
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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
