How to successfully invest in bank owned real estate.
Your online source for reo investing.
heard countless stories about buying bank owned property and how easy it it
is to make a fortune buying foreclosures. It’s as easy as contacting your
local bank and taking the property off of hands for pennies on the dollar.
At reoinvesting.com we hope to provide you some practical knowledge about
how to buying lender owned properties. We hope you find that our site will
leave you better prepared to get the right deal at the right price. We’ll
also help you avoid a number of pitfalls that are inherent in purchasing
REO (meaning real estate owned) is a property that goes back to the original
lender after the foreclosure process has run it course. Given that the
market is currently flood with foreclosures, most foreclosure auctions
result in the lender being the sole bidder on a particular property. In far
too many cases, there was not enough equity in the property to satisfy the
loan after sale. In a foreclosure sale, the lender will generally bid an
amount that includes the loan balance, accrued interest, attorney's fees and
foreclosure costs. Any other liens that are attached and junior to the
foreclosed loan are extinguished by the sale. Very few foreclosure auctions
result in a successful sale on the courthouse steps. After the process is
complete, the property "reverts" to the lender. It becomes an REO, or "real
estate owned" property.
lender now holds title to the property and the original loan that they
foreclosed on no longer exists. Many properties that are taken back are in
sad shape. An reo property might not be such a great bargain. Spend the time
and do your homework before making an offer. Consider the costs of clean up
and renovation, including time to complete them. Although the price might be
attractive, you are not buying a property that shows “pride of ownership”;
you are buying a foreclosed home that some unfortunate soul was evicted
Lenders are in the business of lending money, not owning and managing real
estate. Their priority in an reo situation is to get the property off of
their books at the highest price in the shortest period of time. If you make
an offer to purchase a property, especially a lowball bid, a lender will
generally present a counter offer, which will approximate what they think
the property is worth. It may be at a higher price than you expect, but they
have to demonstrate to investors, shareholders and auditors that they
attempted to get the highest price possible. Your priority is to get a great
deal on the property, so you should plan to counter the counter offer. The
process may take some time as it may have to be reviewed and approved by
several individuals and companies.
A lender holding an reo property will want to sell a property in "as is"
condition. The lender will allow you to perform any inspections that you
want (at your expense), but don’t expect them to agree to do many repairs.
Your offer should include an inspection contingency period that allows you
to terminate the sale if the inspections reveal unanticipated damages that
the bank will not correct.
Any and property defects will most likely be handled as a credit on the
purchase price, and you financing plans should take that into account. Most
lenders will not provide financing on their reo but you should consider
making it part of your offer, as a property with extensive damage may be
difficult to finance.
We have provided several important tips in making the appropriate offer to
the lender. For instance, include a pre-qualification or better yet, a
pre-approval letter and buyer biography. Make your offer easy to accept.
At reoinvesting.com, we hope that you’ll find our resources and articles
helpful in obtaining the real estate investments that you are seeking.
Remember that an reo property can be a tremendous investment opportunity or
a whole lot of trouble. We hope the site help you in you successfully
obtaining the right property at the right price.