Bank owned REO properties are a hot commodity these days. REO is an acronym for "real-estate owned." It is an attractive option for investors and home buyers looking to get hold of a prime property on the cheap for much less than the market valuation for a non-distressed property.
It might be helpful to find out how REOs come on the market and why they're better as compared to other real estate investments. Not to mention exactly what things need to be considered while buying these distressed homes. In general, an REO property is designated as such once it reverts back to the lender even after an auction. For instance, there may be no bids placed by anyone else at a foreclosure auction, or the lender's bid is the highest one.
Lenders here may be banks or mortgage lenders. Some are even insurers on the hook because they underwrote the loan. Sometimes, government agencies may end up holding REOs after placing liens to recover taxes and other dues from citizens and businesses.
Following the 2007-08 real estate market crash, millions of homes got foreclosed and many of them subsequently landed up in the possession of the banks and lenders as REOs. Most are in states such as California and Florida that were hit the hardest by the crash. There are many ways to find a distressed property in a specific region, county or municipality within a chosen state.
The simplest method is to check with all the banks and mortgage lenders that have offices and branches in the region. The bigger ones will have web listings of foreclosed properties and REOs that are up for sale or auction. If not, get in touch with their loss mitigation department or a consultant firm that has been hired to handle all the foreclosures, auctions and sale of seized assets.
There are no general rules that apply to all REOs, so each bank has its own way of selling them. As far as buyers are concerned, think of it like any other property investment. Do the same due diligence, including an independent valuation and a title search. One key requirement is an inspection of the home, because most distressed homes will have fallen into disrepair.
Also note that lenders will want to sell it off "as is, " and the cost of the repairs is usually borne by the buyer. Factor this into the total purchase cost before making an offer for the place. Most banks and lenders selling REOs make it easy for the new buyer to apply for financing that covers the full purchase price.
Easy financing plus a below market price makes bank owned REO properties an attractive option. It is possible because the lender is not a real estate investor, per se. Their primary concern is liquidating the asset and closing the books on the unpaid mortgage balance that led to the foreclosure. They will therefore be willing to let it go for anything that is close to the sum owed, even if it is far less than the market valuation of a similar but non-distressed home in the same neighborhood.
It might be helpful to find out how REOs come on the market and why they're better as compared to other real estate investments. Not to mention exactly what things need to be considered while buying these distressed homes. In general, an REO property is designated as such once it reverts back to the lender even after an auction. For instance, there may be no bids placed by anyone else at a foreclosure auction, or the lender's bid is the highest one.
Lenders here may be banks or mortgage lenders. Some are even insurers on the hook because they underwrote the loan. Sometimes, government agencies may end up holding REOs after placing liens to recover taxes and other dues from citizens and businesses.
Following the 2007-08 real estate market crash, millions of homes got foreclosed and many of them subsequently landed up in the possession of the banks and lenders as REOs. Most are in states such as California and Florida that were hit the hardest by the crash. There are many ways to find a distressed property in a specific region, county or municipality within a chosen state.
The simplest method is to check with all the banks and mortgage lenders that have offices and branches in the region. The bigger ones will have web listings of foreclosed properties and REOs that are up for sale or auction. If not, get in touch with their loss mitigation department or a consultant firm that has been hired to handle all the foreclosures, auctions and sale of seized assets.
There are no general rules that apply to all REOs, so each bank has its own way of selling them. As far as buyers are concerned, think of it like any other property investment. Do the same due diligence, including an independent valuation and a title search. One key requirement is an inspection of the home, because most distressed homes will have fallen into disrepair.
Also note that lenders will want to sell it off "as is, " and the cost of the repairs is usually borne by the buyer. Factor this into the total purchase cost before making an offer for the place. Most banks and lenders selling REOs make it easy for the new buyer to apply for financing that covers the full purchase price.
Easy financing plus a below market price makes bank owned REO properties an attractive option. It is possible because the lender is not a real estate investor, per se. Their primary concern is liquidating the asset and closing the books on the unpaid mortgage balance that led to the foreclosure. They will therefore be willing to let it go for anything that is close to the sum owed, even if it is far less than the market valuation of a similar but non-distressed home in the same neighborhood.
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