Bank Owned Real EstateBank owned real estate, or REO properties are a fantastic way to purchase properties at a good discount. REO simply stands for real estate owned.Let's recap... After a lender starts the foreclosure process and an auction is held on the courthouse steps, if the property doesn't sell for the opening bid, the attorney for the lender will purchase the property back. This happens a lot because banks will try to get the amount owed for the property. Since most bidders at a courthouse auction are there to get a great deal, sometimes the bidders won't bid what the bank is wanting. At this point the property is considered bank owned real estate or REO. The bank will list the property with a local realtor. Here is where you come in. You go to a real estate company and tell them you want to talk to an agent who handles REO property. You tell the agent what price range you are wanting. Now remember to keep in mind what you want to do with the property. Will you flip it for a quick profit or will it be a long term rental. This will greatly influence what properties you look at. Now pay close attention to this because I'm going to let you in on a tip about REO banks.... They hate having properties on their balance sheet for more than 90 days! Now, here is another tidbit... They like to clean up their balance sheets before another quarter begins. So here is a strategy for you. In the last month of a quarter find a property that has been listed for close to 90 days. That's your target property! The reason I like for investors, especially beginning investors, to purchase properties as bank owned real estate is because you have the help of a broker. Also, and most importantly, you can get an inspection done. If something comes back on the inspection report the bank won't fix it, but at least you are aware of any issues and can get out of the deal if it's something really bad. Just remember to check your market and know what the property is worth. Look at several REO properties before committing to one. Offer the bank at least 20% less. They may counter, but even so you should be able to purchase a property with at least that much equity in it.
Bank of America Return From Bank Owned Real Estate to Straight Up Real Estate Investing |
