Buying REO properties is a good way of buying properties at below market value. REO properties are properties that are own by a bank. An REO is a “Real Estate Owned” property that has been through the foreclosure process, and has been purchased at the foreclosure auction by the lender.
The lender takes the responsibility of paying the junior liens, and to avoid this, they take the property to auction.
In order to do well with REO investing, one need to have a better understanding of how this work. It’s how they deal and how much they know that makes a difference in landing a good deal.
One way for an investor to get the REO’s is for the investor to buy all of the homes in a package – whether they are vacant lots or condemned. Not to mention the location of all properties.
When buying in bulk, the price of REO properties is reduced, keeping it cheap for the investors. Finding the market value of each property would help in determining the purchase price of an REO.
Banks may accept an offer below the market value just to have the properties off their hands. They need to minimize their losses and this is impossible to achieve if they have several REO properties under them
One good thing about buying an REO property is you get to inspect it before giving a final offer. This way, the buyer can assess the necessary repair to be done and calculate the expenses needed.
One thing to remember when buying an REO property. It’s sold in “As IS’ condition, meaning the bank will not shoulder any repairs needed and the buyer should take the property under its current condition.
|
|