The Advantage of REO
Friday, February 20th, 2009
Real Estate Owned properties are foreclosed properties owned by banks which aren’t sold thru public auction.
A list of foreclosed properties are given by the bank with details about the property. Most properties are managed by the bank loss mitigation department and others are managed by Realtors.
It’s no surprise that the foreclosure market is at an all time high as it seems that more and more properties continue to face home foreclosure. Because of this increased volume over the past few years and the resulting opportunities the need for a real estate investing guide in foreclosures is tremendous.
When buying REO, you have the flexibility to buy at any given time and make an offer without the need to wait for auction or bidding.
Another big advantage of an REO compared to a foreclosed property is that you can inspect it before you buy, when you cannot do this with the majority of foreclosed homes that you think about purchasing. Being able to inspect the property before you buy will let you know how big of a project you will be dealing with.
Basically, a bank is not set up to deal with real estate. Sure, they give loans to people, but really, they are not equipped to buy and sell real estate. Because banks are not accustomed to dealing with real estate, it often takes them awhile to get the ball rolling so that they can repair the property, and get an agent to sell the property.
What this means is that while the bank attempts to get their business together they are losing money hand over fist and the federal government often penalizes them for each and every REO that they acquire.
The great thing about working with the bank with an REO is that you aren’t buying site unseen. Because you can walk through the house and make all the inspections that you want, you can deal with them in a way that will give you the best deal, and the bank will typically be happy with any serious offer because it will get the house off of their hand and they will stop losing money.
