span estate note, along with creditor
class="cap">I n or tax liens and a slew of other
today's real estate add-on fees.
industry, REO is quite the buzz
In today's shaky economy, few
word. An acronym for Real Estate investors are willing to pay more
Owned, REO properties are owned money than a house is worth. To
by the bank. Before property top it off, foreclosure
becomes bank owned, an attempt to properties are notorious for
sell it through foreclosure needing repairs and renovations.
auction must first be made. It does not make good financial
The word on the street is REO sense to buy property at a price
properties can be picked up for above current market value and
dirt cheap. However, this is then pour more money into
rarely the case. The only repairs. Instead, investors are
exception to the rule is if you waiting for foreclosure
are able to locate a private real properties to revert to the
estate investor who specializes bank.
in buying bank portfolios
Once the bank takes possession
consisting of multiple REO homes. of the home, they eliminate the
We'll talk about that more in a mortgage, remove or reduce liens,
moment.
and evict individuals who may
Keep in mind most foreclosure still be residing in the home.
homes have no equity and an Occasionally, they will invest in
inflated mortgage. More money is repairs, clean up the property
owed on the mortgage note than and give it a touch of curb
the house is worth. When a house appeal. In essence, REO
is placed on the auction block, properties are a nice tidy
anyone interested in bidding on package awaiting a new owner.
the property must make an offer
Many investors seek out
that covers the cost of the real distressed REO bank properties
directly from the bank. take several weeks to complete or
Oftentimes, these properties are it may fall through
listed on the individual bank completely.
websites. The listings generally
When working with banks to
include the name and contact purchase REO properties prepare
information for the individual for an influx of counter-offers.
handling the property. These Doing so will provide you with
individuals are known as Loss time to create a solid
Mitigators. Their job is to counter-offer. If there are
obtain the maximum price for REO numerous repairs or major
properties in their charge.
renovations required, take photos
Currently, banks are flooded and submit along with your
with REO properties which can proposal. Request the bank take
make it cumbersome for investors care of the repairs or adjust the
or individuals to purchase these selling price to offset the
homes. The vast majority of banks costs. Thorough documentation and
will not even considering offers professional presentation can
of less than ninety-five cents on help you seal the deal.
the dollar. If you are interested
A lesser known way to acquire
in a property with a note balance REO properties is to seek out
of $100,000 the minimum offer a private real estate investors who
bank will consider is specialize in purchasing bank
$95,000.
owned property portfolios. By
Chances are if you start with buying in bulk, these investors
an offer of $95,000, the bank can purchase distressed
will come back to you with a properties at wholesale cost and
counter-offer. They might want pass the savings along to
$98,000 for the property. You, in you.
turn, submit another
Once an investor has purchased
counter-offer. This process could REO properties, they are no
longer owned by the bank. 10px;" valign="top"
Oftentimes, people can purchase align="center">
these properties directly from
the investor under current market
value. Savings can be as much as type="text/javascript">
About the Author:
Simon Volkov, private Real Estate Note Investor, offers nationwide REO investment opportunities for both serious and novice investors. Interested parties can subscribe to real-time investments via RSS feed or email subscription. Subscribe today at www.SimonVolkov.com.
