It can be said that the current chaos in the real estate market has led to a number of opportunities opening for those looking to make a home purchase. One venue in which people are turning is the world of purchasing REO properties. For those not familiar with the term, REO properties are those properties owned by banks. Ownership was acquired on properties after the homeowners fell behind on their mortgage payments. Unable to receive the money owed, the banks foreclosed on the property. This then creates a quandary for the bank as banks are in the lending business and not the home sales business. As such, they must sell off the homes they foreclose upon as quickly as possible in order to recoup their investment. Again, for a potential buyer, this can create a tremendous opportunity.
How do you know which banks are offering REO properties for sale? More than likely, ANY bank that you call will have such properties for sale. That is why it would not hurt to cold call various lenders in your area and ask them for a listing of the REO properties up for sale. If the bank is putting property on the market, they will surely tell you.
Also, it is important to point out that banks will also publicly list properties that they may be offering for sale. So, skimming traditional promotional venues such as classified ads may turn up REO properties for sale. But, if you wish to be more proactive, contacting the lenders directly may be the better option.
When you do find a bank that is offering a property for sale, you will need to make an offer. BUT….It is advised not to make an immediate offer on the home based on the price that is listed. Instead, it would be a much wiser option to weigh the market value of the home vs. the amount of money the bank was owed on the home. Then, compile the various costs associated with owning such a home. From this, you can make a more competitive offer. The bank may not accept the offer, but the door for negotiation is opened. Better yet, it is opened in a manner more agreeable to someone looking for a deal.
The process of making and offer to the bank and following through with a purchase will not be much different from the traditional manner. So, do not approach the bank differently than a real estate agent or an owner. It becomes necessary to visit the property and perform all necessary inspections on it. This is even more important with REO properties since the financial problems of the previous tenant could have led the property falling into disarray. That is why you will need to be clear on the condition of the home prior to making a purchase.
Yes, purchasing a bank owned property comes with many potential benefits. That is why exploring options available with REO properties is among the best strategies to follow in today’s real estate market.
Tags: Bank owned properties, REO
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