Bank Owned Real Estate FAQ - Should You Become a New Owner of an REO Property? You may have planned to buy a new house in a few years, but conditions in the real estate market makes a compelling case for looking at REO properties this year instead.
How does a property become an REO?
The house becomes REO when nobody bids on it during the foreclosure auction because the starting bid placed by the bank to recover its costs (mortgage balance and expenses) is higher than the market value of the house.
Why should I be interested in bank owned properties?
- REO properties are a great bargain today. REO homes are more affordable than buying new and other existing homes in the market. Buying REO properties is also less risky than properties acquired in foreclosure auctions; and involves less work, time, and emotional negotiations than buying short sale homes.
- The supply of foreclosure homes starting 2008 is the highest in recent history. Nineteen million homes were foreclosed in 2008 according to Realty Trac. The economic slowdown, continuing rise of unemployment numbers in the U.S., and tightening of credit are increasing the supply of foreclosure homes in the market.
Banks and mortgage lenders are becoming more motivated to price these houses lower to recover their capital and put a stop to their increasing expenses.
But once the economy recovers and new lending regulations and practices become the new norm, the supply of REO homes in the market will become limited and prices will once again favor lenders and banks.
Hence, the buying opportunity for REO homes today is considered a limited opportunity. It will end soon.
But what difficulties do buyers experience when dealing with a bank as a property seller?
Banks are in control of the REO process. There is not much room for the buyer to negotiate and buying the REO property means buying the property in its present condition.
And since various people required to approve REO sales may be located in a different state or even country from the property, slow responses and delays can be very frustrating. However, banks are working right now to make their processes more efficient.
What is the most effective way for new investors to participate in the REO market?
Investors, especially newbies should further reduce their risk and expenses by hiring experts.
If necessary, consult a financial expert to assess your capacity to purchase real estate. Are REO properties a bargain for you? Or are they in reality still above your means and you need to find partners or investors?
Hire an experienced realtor to help you find the best REO opportunities, reduce your risks, and place the most competitive bid right for you.
Hire a property inspector to correctly estimate the costs involve in making the property livable according to your standards.
Hence, don't just get swept by the REO crowd. Make certain that you have the proper advisors on your team in order to increase your chances of success.
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Craig Picard and Don Goff have helped 367 real estate investors grow their profits from buying and selling bank owned properties from zero to over $10,000 per month in only 3 months. To get your free CD "Foreclosure Investing Secrets" and learn how to profit during this recession go to http://www.REOInvestingRiches.com. Article Source: http://EzineArticles.com/?expert=Craig_Picard**********
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