Buying REO
Buying REO property looks to be the best bet in Real Estate these days. As an Investor or potential home buyer, you have been watching the real estate market closely since the bubble burst.Wholesaling is a tough business these days due to the fact that the market has quite literally knocked any equity out of a potential seller’s property, unless they own it free and clear, thereby making any deal slim to not profitable. While this would seem good for the short sales business, the fact remains that even with the best game plan the two variables that cannot be controlled are the bank and finding a buyers.
Buying at foreclosure auctions on the courthouse steps was the way to get deep discounts on property and the trend was for the banks to price the property by what the first mortgage or deed of trust amount was plus their costs. What banks found was that their inventories were growing, prices continued to fall and they still with few exceptions were unable to make sales at the public foreclosure auctions. Now for the past six months or so they have developed other tactics in hopes to move additional properties including pricing the properties well below what the first mortgage amounts were and somewhere near the perceived current market value, normally determined by a BPO agent. In some cases, after discounting those notes sixty cents on the dollar, bargains are found and investors with cash in hand could pick these up, along with the liabilities such as back property taxes and removing the previous owners or even tenants. But for the most part the properties at the foreclosure auction end up back in the banks hands as an REO short for real estate owned.
You have most likely heard that the banks are not in the Real Estate business, they are in the lending business. This is all too true banks do not want to own property. Banks rely on Real Estate professionals when it comes to property acquisition and sales. There may be those rare cases where they may deal closely with a large investor, who may contract with them to move a large block of assets such as “bulk REO packages” but for the majority of the REO’s they rely on real estate brokers to handle the disposition of the property. The advantage for buying REO property is that the title is clear, back taxes and tax liens are paid and the property is vacant. For the most part this process can take several months before a property is placed on the market. From this point on it is the Realtors (R) who control what takes place with the REO property.
A property may sit on the market for a year or more before it is finally sold or it may be a matter of days, again this depends on the pricing and the real estate broker who is working the REO deal. Some properties may see several Brokers before they are finally sold. During that time a property deteriorates, becomes vandalized and repair costs mount. The property is sold as-is and the repairs are the buyers problem (not the same playing field as it is when you are a seller), there is no disclosure requirement for the banks in their purchase contract.
One think to keep in mind is that you will only work with the Real Estate Broker or his agent. They will work with the bank. Being prepared with cash or financing in hand, when you present your justified offer no contingencies to the REO agent will greatly improve your success in getting the REO deal closed.
Real estate investors are playing a key role in the housing recovery now underway, buying up bank REO property, wading into distressed neighborhoods to turn around boarded-up foreclosures into rentals.
Tips For Investors Or Prospects Looking To Buy Bank REO
Buying REO bank owned properties may not be a bad idea as an investment vehicle, but it is critical to be aware of the recompense and disadvantages to these kind of investment strategies.
What To Know When Buying REO Properties
The following are some tips on what to know when buying REO properties. You should complete a thorough inspection of the property which should include the major structures of the home.
When Buying REO Properties What Do You Look For
When Buying REO Properties What Do You Look For; Post by Jerome Pennix. Filed under Finance. by Jerome Pennix. REO properties are one of the hottest ways to invest in real estate right now.
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