REO Foreclosures
Posted on September 8, 2008
Filed Under REO |
A real estate foreclosure is also known as a bank foreclosure. A bank foreclosure is what occurs when a mortgage holder cannot meet their financial obligations when it comes to paying what they owe their bank or lender. The home is collateral and the bank can repossess the home if they find that the home owner has defaulted.
REO homes are becoming very popular among serious and beginning real estate investors. These homes may be single family homes or multi-family homes, farms, vacant lots or commercial buildings. A REO takes some time to process and a savvy real estate investor knows about the lapse in time between when the homeowner defaults and when the lender or bank will take back the property. This time period is called the pre-foreclosure period. During pre foreclosure, the owner of the home can try to sell the house and save their credit. For the real estate investor, this can work out for them because the owner of the house wants to sell it quickly and because of this they will sell the home for less than it is worth.
If the home is not sold during the pre foreclosure period, the bank will take possession of the home. When the bank takes possession of the home they want to sell the home for a number of reasons.
First, banks are not in the real estate business. Bank is financial institutions. Next if a bank has several homes on their books, this looks bad for them. Several homes on their books show that the bank has made poor decisions.
Banks also lose money if they own a property that has been repossessed. The bank will have to pay insurance, pay taxes on the home, and pay or maintenance.
The longer they keep the property, more money is wasted.
Finally, the bank needs to get back some of what they loss on the loan the homeowner defaulted on.
Banks will typically want to get foreclosed properties off of their books very quickly so there are many times where they will sell the foreclosure at twenty to sixty percent under market value. Because of this, the real estate investor has a golden opportunity.
A savy real estate investor will search for REO properties. They will look at the properties and see if the property fits their budget and their needs. There are many websites that list bank foreclosures. However, some of the listings are out-dated. On the website bankforeclosures.com, there are current listings of homes that have been foreclosed on. They also have listings of government foreclosures and commercial foreclosures. There is a fee to get access to the listings but for the real estate investor, this splendid service is well worth it.
Bank foreclosures are an investment that is virtually risk free. This is because homes sell for well below market value and there are no more liens on the home. The real estate investor would only have to pay the sale price for the home.
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[...] it. Those that are considering buying these properties at the pre-foreclosure, auctions and other REO should look at the physical condition of the house. They should get professional inspectors to [...]
[...] from a bank after a foreclosure has been completed, this is known as buying a real estate owned or REO home. Purchasing an REO offers the least risk when buying a foreclosure home. When you purchase an REO, [...]