REO Properties and Bank Foreclosures
Whether you're in the market for your first new home or your tenth, you'll discover that there are a lot of new options available to prospective home buyers. You'll find traditional buying options, online home auctions, and other choices a realtor can explain to you. One buying option you may not have thought of, though, is that of bank REO sales.
REO 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 purchasing bank owned properties, ensure that you pay close attention to the condition of the property that you are buying. Some bank owned properties, although they are inexpensive, are in need of maintenance. In such cases, these repairs may be done without cutting too much into your profit. So be careful of major structural problems but realize that houses needing some work are often where the big profits are hiding - that's why you can get them for a bargain.
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.
Other ways to find bank owned homes include going to third party listings. There is a proliferation of independent and third party Web sites who will also provide information about properties. With all Web sites, however, be careful. Many of these sites are trustworthy, but not all are. Use your best judgment when dealing with third party listings.
When you bid on any REO property, the bank will probably respond with a conuter offer. There will be bargaining involved, so keep that in mind what determining what price you intend to bid. Make sure that you mention any repairs that you intend to make during the negotiation process. When you actually purchase the property, you will get a title insurance policy. It is important that you avoid paying too much bcause you have become obsessed with winning the bidding for a property. Keep your head, and you will do fine.
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A critical element to real estate investing is having a source for great deals. One option that you may not have looked into is that of bank owned real estate or REO properties. If a bank fails to sell its "bank foreclosures" at auction during the foreclosure process, it will commence an REO sale and this is where bargains can be had. Banks like to get rid of the property they own quickly; since they are not in the business of owning real estate it is unprofitable for them.
Published November 17th, 2007
Filed in Business, Career, Finance, Home Business, Real Estate
