| Purchasing Properties Owned by the Bank | | | | Is it cost effective? |
| More people are becoming interested in purchasing | | | | The most common misconception about REOs is that |
| properties owned by the bank. We often see | | | | they are all great deals and you can make a lot of |
| information advertised promising to make us lot of | | | | money from them. This is not totally true. If your |
| money without having to put much effort - once we | | | | intention is to gain profit from purchasing properties |
| know the secret how to do it. In reality, there is no | | | | that are real estate owned, then you need to be very |
| such thing as a secret method and in order to earn | | | | careful. Banks want to recover their money or even |
| money, hard work is required. | | | | profit from every sale they make - do not assume the |
| What is REO? | | | | home is priced as a bargain. You will need to verify the |
| REO means Real Estate Owned. This term is used | | | | real market value of the property that you want to |
| for properties that are now owned by a financial | | | | purchase. You will also need to include in your costings |
| institute, after being foreclosed upon due to inability of | | | | the possible renovations, various repairs that the |
| the owners to pay mortgage. However, you need to | | | | property will need and carrying costs. There are a lot |
| know that this is not the same as homes that are | | | | of people who find success in purchasing REOs and |
| heading for foreclosure auction. If you are interested in | | | | reselling them. However, you need to consider that |
| purchasing homes sold during a foreclosure auction, | | | | there are also some REOs that are not profitable. |
| you will have to pay the remaining loan balance | | | | Are you ready to invest? |
| including additional fees that was incurred during the | | | | If you're interested in purchasing REO's from banks, |
| foreclosure itself. Also, you need to be ready with | | | | then you will have to negotiate with their REO |
| cash at hand to pay for all of these. The home that | | | | department. Usually, these REO departments have |
| you will acquire will also be "as is", meaning that if there | | | | their own real estate agents that list the REO |
| are current residents in the house you will have to | | | | properties on the MLS. If you see an REO property |
| evict them. On the other hand, an REO property is | | | | you like the look of, contact a real estate agent that is |
| often a greater deal and investment because it has | | | | experienced with distressed property sales. You can |
| less hassle. Actually, an REO property is a house that | | | | ask the agent all the information that you need to |
| didn't have a buyer during the foreclosure sale. Since | | | | know about the property so that you can check if it is |
| the bank is the owner of the property, it will be | | | | worthy or not. Typically, banks will just sell their REO |
| responsible for the eviction of the occupants, removal | | | | properties "as is" without making necessary repairs or |
| of liens, and issuing of title insurance policy. REO's are | | | | renovations. So before you close the deal with these |
| exempt from completing a Sellers Property Disclosure, | | | | banks, it is necessary that you make careful |
| therefore you are not aware of any defects and | | | | examinations of the property itself and check for |
| cannot sue the seller if you purchase the property and | | | | damage. If you find any, your can often help you |
| find a defect. | | | | withdraw your offer to purchase. |