| day's real estate industry, REO is quite the buzz word. | | | | which can make it cumbersome for investors or |
| An acronym for Real Estate Owned, REO properties | | | | individuals to purchase these homes. The vast majority |
| are owned by the bank. Before property becomes | | | | of banks will not even considering offers of less than |
| bank owned, an attempt to sell it through foreclosure | | | | ninety-five cents on the dollar. If you are interested in a |
| auction must first be made. | | | | property with a note balance of $100,000 the minimum |
| The word on the street is REO properties can be | | | | offer a bank will consider is $95,000. |
| picked up for dirt cheap. However, this is rarely the | | | | Chances are if you start with an offer of $95,000, the |
| case. The only exception to the rule is if you are able | | | | bank will come back to you with a counter-offer. They |
| to locate a private real estate investor who specializes | | | | might want $98,000 for the property. You, in turn, |
| in buying bank portfolios consisting of multiple REO | | | | submit another counter-offer. This process could take |
| homes. We'll talk about that more in a moment. | | | | several weeks to complete or it may fall through |
| Keep in mind most foreclosure homes have no equity | | | | completely. |
| and an inflated mortgage. More money is owed on the | | | | When working with banks to purchase REO |
| mortgage note than the house is worth. When a house | | | | properties prepare for an influx of counter-offers. |
| is placed on the auction block, anyone interested in | | | | Doing so will provide you with time to create a solid |
| bidding on the property must make an offer that | | | | counter-offer. If there are numerous repairs or major |
| covers the cost of the real estate note, along with | | | | renovations required, take photos and submit along |
| creditor or tax liens and a slew of other add-on fees. | | | | with your proposal. Request the bank take care of the |
| In today's shaky economy, few investors are willing to | | | | repairs or adjust the selling price to offset the costs. |
| pay more money than a house is worth. To top it off, | | | | Thorough documentation and professional presentation |
| foreclosure properties are notorious for needing | | | | can help you seal the deal. |
| repairs and renovations. It does not make good | | | | A lesser known way to acquire REO properties is to |
| financial sense to buy property at a price above | | | | seek out private real estate investors who specialize in |
| current market value and then pour more money into | | | | purchasing bank owned property portfolios. By buying |
| repairs. Instead, investors are waiting for foreclosure | | | | in bulk, these investors can purchase distressed |
| properties to revert to the bank. | | | | properties at wholesale cost and pass the savings |
| Once the bank takes possession of the home, they | | | | along to you. |
| eliminate the mortgage, remove or reduce liens, and | | | | Once an investor has purchased REO properties, they |
| evict individuals who may still be residing in the home. | | | | are no longer owned by the bank. Oftentimes, people |
| Occasionally, they will invest in repairs, clean up the | | | | can purchase these properties directly from the |
| property and give it a touch of curb appeal. In essence, | | | | investor under current market value. Savings can be |
| REO properties are a nice tidy package awaiting a | | | | as much as 40 percent, providing the buyer with |
| new owner. | | | | instant equity. |
| Many investors seek out distressed REO bank | | | | Regardless of whether you purchase REO properties |
| properties directly from the bank. Oftentimes, these | | | | through the bank or a private real estate investor, it's a |
| properties are listed on the individual bank websites. | | | | good idea to work with an individual who has a |
| The listings generally include the name and contact | | | | thorough understanding of this type of real estate |
| information for the individual handling the property. | | | | transaction. These individuals can guide you through |
| These individuals are known as Loss Mitigators. Their | | | | the process and help you locate properties. One |
| job is to obtain the maximum price for REO properties | | | | missing form can cause you to lose out on a lucrative |
| in their charge. | | | | real estate opportunity. Are you willing to risk that? |
| Currently, banks are flooded with REO properties | | | | |