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Posted by xin xiu24 on 2. Aug 2016
n REO is real estate owned by the bank Cool Base
Chris Archer Jersey , and many investors consider an REO property
to be money just waiting to happen. An REO is different from a foreclosure
property in that the bank has already tried to sell it at a foreclosure auction
and has had no luck getting bids. Because the property was not bid on, the bank
then became the owner of the property. Naturally, the bank does not want to keep
the REO any longer than possible, and this makes it a great opportunity for an
investor. Not every REO is a good deal, but when you look at an REO youll
commonly find that there is a lot of money to be made.
So, is this a
foreclosure?
Technically speaking, the home was foreclosed on because the
owner of the home failed to make their scheduled payments. The bank set up and
went through a public auction, but there was not any bids placed on the home, so
the bank ended up owing the property. Yes, the home was foreclosed on, but it is
well past the foreclosure process and the bank will be anxious to get rid of the
property.
Advantages of REO vs. Foreclosed Property
When you are
thinking of buying an REO you have to distinct advantages that a buyer does not
have with a foreclosed property. The first is that you are able to buy on your
schedule, as you do not have an auction date to work with and around. You can
make an offer of the home any time; you dont have to wait for bidding to begin.
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.
Best types of REO to purchase
You might not think
the type of loan the home was purchased with the first time around matters but
it does. You should attempt to purchase REOs that had a conventional loan the
first time around, as you will likely get much better deals with these than you
will if you look at FHA and VA loans. The federal government backs FHA and VA
loans, and the government can actually buy them back if they are so inclined.
Homes that had conventional loans the first time are often purchased for just a
fraction of their value, meaning that they can make an investor a lot more
money.
Which REOs you should not purchase
Just because the bank
owns a property does not make it a good deal. In fact, when you see that a home
or property is an REO you have to wonder exactly what IS wrong with it. The
house was not bid on because no one saw the worth in it. Did the home just not
have enough equity? Were their IRS liens against it? Was the property just too
badly damaged? You need to ask these questions. If the bank cannot answer the
questions then you need to be even more skeptical. Take advantage of your right
to inspect the REO so that you can see with your own eyes what may or may not be
wrong, hire professionals if necessary as well.
One must also be sure
that if they are purchasing an REO to fix it up and sell it, that the property
is located in a desirable part of town. If the home is not located in a
desirable part of town, you should really think about how wise of an investment
the property may be. Perhaps location is why the property was not bid on at
auction. There are three big things to consider when dealing with any type of
real estate and those are location, location, location. Never let a seemingly
good deal let you lose sight of how important location is for any piece of real
estate that you intend to sell.
Why the bank will sell an REO
cheap
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.
Because the bank is loosing so much money on each REO, they
are willing to sell it fast and cheap. In fact, banks commonly sell an REO
property for around 30 of its value just to be done with it. Sure, they end up
losing money on the deal, but they end up losing less if they sell cheap now
than they would if they kept the property for another six months while they try
to pull everything together so that they can sell the property.
The great
thing about working with the bank with an REO is that you arent 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.
Generally REOs
are a great investment as long as you know what you are getting into. The bank
simply wants to get rid of these homes, and if you find the right property and
are ready to make the serious investment, it can be a great way to get off and
running in the real estate business.
Author's Resource Box
For more Information please Visit : http:www.theforeclosuresinfo and
http:www.JohnHomesOnline
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