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Why Buy A REO
n REO is real estate owned any bids placed on the home, so
by the bank, and many the bank ended up owing the
investors consider an REO property. Yes, the home was
property to be money just waiting foreclosed on, but it is well
to happen. An REO is different past the foreclosure process and
from a foreclosure property in the bank will be anxious to get
that the bank has already tried rid of the property.
to sell it at a foreclosure
auction and has had no luck Advantages of REO vs. Foreclosed
getting bids. Because the Property
property was not bid on, the bank
then became the owner of the When you are thinking of buying
property. Naturally, the bank an REO you have to distinct
does not want to keep the REO any advantages that a buyer does not
longer than possible, and this have with a foreclosed property.
makes it a great opportunity for The first is that you are able to
an investor. Not every REO is a buy on your schedule, as you do
good deal, but when you look at not have an auction date to work
an REO you’ll commonly find that with and around. You can make an
there is a lot of money to be offer of the home any time; you
made. don’t have to wait for bidding to
begin. Another big advantage of
So, is this a foreclosure? an REO compared to a foreclosed
property is that you can inspect
Technically speaking, the home it before you buy, when you
was foreclosed on because the cannot do this with the majority
owner of the home failed to make of foreclosed homes that you
their scheduled payments. The think about purchasing. Being
bank set up and went through a able to inspect the property
public auction, but there was not before you buy will let you know
how big of a project you will be deal. In fact, when you see that
dealing with. a home or property is an REO you
have to wonder exactly what IS
Best types of REO to purchase wrong with it. The house was not
bid on because no one saw the
You might not think the type of worth in it. Did the home just
loan the home was purchased with not have enough equity? Were
the first time around matters but their IRS liens against it? Was
it does. You should attempt to the property just too badly
purchase REO’s that had a damaged? You need to ask these
conventional loan the first time questions. If the bank cannot
around, as you will likely get answer the questions then you
much better deals with these than need to be even more skeptical.
you will if you look at FHA and Take advantage of your right to
VA loans. The federal government inspect the REO so that you can
backs FHA and VA loans, and the see with your own eyes what may
government can actually buy them or may not be wrong, hire
back if they are so inclined. professionals if necessary as
Homes that had conventional loans well.
the first time are often
purchased for just a fraction of One must also be sure that if
their value, meaning that they they are purchasing an REO to fix
can make an investor a lot more it up and sell it, that the
money. property is located in a
desirable part of town. If the
Which REO’s you should not home is not located in a
purchase desirable part of town, you
should really think about how
Just because the bank owns a wise of an investment the
property does not make it a good property may be. Perhaps location
is why the property was not bid for each and every REO that they
on at auction. There are three acquire.
big things to consider when
dealing with any type of real Because the bank is loosing so
estate and those are location, much money on each REO, they are
location, location. Never let a willing to sell it fast and
seemingly good deal let you lose cheap. In fact, banks commonly
sight of how important location sell an REO property for around
is for any piece of real estate 30% of its value just to be done
that you intend to sell. with it. Sure, they end up losing
money on the deal, but they end
Why the bank will sell an REO up losing less if they sell cheap
cheap now than they would if they kept
the property for another six
Basically, a bank is not set up months while they try to pull
to deal with real estate. Sure, everything together so that they
they give loans to people, but can sell the property.
really, they are not equipped to
buy and sell real estate. Because The great thing about working
banks are not accustomed to with the bank with an REO is that
dealing with real estate, it you aren’t buying site unseen.
often takes them awhile to get Because you can walk through the
the ball rolling so that they can house and make all the
repair the property, and get an inspections that you want, you
agent to sell the property. What can deal with them in a way that
this means is that while the bank will give you the best deal, and
attempts to get their business the bank will typically be happy
together they are losing money with any serious offer because it
hand over fist and the federal will get the house off of their
government often penalizes them hand and they will stop losing
money. right property and are ready to
make the serious investment, it
Generally REOs are a great can be a great way to get off and
investment as long as you know running in the real estate
what you are getting into. The business.
bank simply wants to get rid of
these homes, and if you find the
About the Author:
For more Information please Visit : Foreclosures and East Bay Real Estate
Read more articles by: John Nazareno
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