What You Need To Know About Bank Owned REO Properties

June 2, 2013 | Author: | Posted in Customer Service

There is a lot of profit to be made from bank owned REO properties. Banks and other mortgage lenders are only interested in getting back their money, so they often sell properties repossessed from borrowers who default on loans. In full, REO stands for Real Estate Owned by lenders or banks. They are simply foreclosures that could not be sold at the right price during the public auction.

When a property owner fails to pay the principal or interest accruing to the mortgage loan, the lender must initiate foreclosure proceedings so as to recover the money through sale of the lien. In a non-judicial process, the auction to sell the foreclosure normally occurs three months after the lender sends the notice of default.

There is normally a reserve price in any auction. When bids are lower than the reserve price, the ownership of the property cannot be transferred to the highest bidder. When foreclosures are being sold at a public auction and this happens, the lender gets to own the asset. Consequently, the property is tagged REO.

The tedious process of buying properties that are undergoing foreclosure is what normally scares investors away. For instance, the borrower, in a judicial foreclosure case, has up to 12 months to reclaim the property. This is too long a time for the bank to wait to get its money back, or for buyers to get a chance to fully own the property. Pre-foreclosure sales like short sales are also very tedious and time consuming.

REO properties come with clean titles. Purchasing them is therefore pretty much straightforward. The bank quotes a price, you negotiate or pay the full sum, papers are signed and the title is transferred to you. Compared to pre-foreclosure sales, these transactions are completed much faster and with relative ease. Very little paperwork is also involved.

When looking for REO properties, it is important that you know your market. You need to know the average prices of homes in that area so that you can find a great bargain. Before you make an offer, have the property inspected by an expert. This because the long period the property might have stayed without being occupied or maintained might have led to extensive damage to the structure.

An offer should only be made if the buyer, in this case you, has the money to buy the asset. For this reason, you need to save for the downpayment and contact your bank for financing. You need to act quickly because great deals are rare, and they are usually grabbed as soon as they are listed. Preparation is therefore the key to getting the right property.

Repairs and renovations may need to be done on bank owned REO properties. You therefore need to include these costs in your budget. Finding these deals is very easy nowadays because there are numerous listings on the internet that have these assets. What you need to do is search the web for deals that meet your requirements.

You can visit the website agamproperties.com for more helpful information about Learn More About Bank Owned REO Properties

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