A property is considered an REO or Real Estate Owned Property, after it has failed to draw bids in a foreclosure auction. In such a case, the property is returned to the lenders which are usually banks. They in turn then put these properties up for sale at a lower price. These REO homes are a recent development in the real estate business that is growing fast as banks are gaining proprietorship over these distressed properties.
This is also a good time for first time buyers and investors to take advantage of these opportunities because these bargains deals are quite profitable compared to the original bids at auctions. People who aspire to own a house but are under budget constraints can now hope to fulfill their dreams. It is also a very good proposition for investors who want to buy these distressed homes in bulk and sell them. For most people, REO properties mean buying at rates below the market value. It is completely wrong, however, to assume that properties declared as REO are sold at throwaway prices.
It is not an easy task to buy an REO property. Lenders will try their best to get the highest selling price they can muster. Here, location-based extensive market research can provide you with an advantage. These lenders are not always very cooperative about repairing these type of properties. This could mean that you may have to stretch your expenses. Negotiations and skillful tactics in involving the lenders in repair work can ease the financial strain on you.
A Few Tips to Help You Procure A Suitable Property
You should attend foreclosure auctions, not with the intention to buy any property but to make a note of the properties that are not sold. Then you can contact the realtors who deal in REO properties.
It is a good practice to find out in advance whether there are any other offers on the chosen properties for sale. Based on this information you may have to consider making a viable offer.
Banks will never agree to your first offer and you will have to continuously negotiate to get a good bargain. Negotiations are a good way of reaching an agreeable price that is suited to both you and the lenders.
Ensure that you get the inspection rights before you purchase the property.
Try to seek help from those who have real estate knowledge. Realtors with credible experience, a strong management system, a good relationship with banks and lenders and with a good network of realtors, contractors and appraisers can provide you with vital tips on progressing with your REO property bargaining process.
Banks are always in a hurry to close deals. Do not delay too much in closing the deal, whether it works in your favor or not. Try to close within 10 days to help you clinch the deal.
REO properties for sale are a much better bargain than foreclosures. However you need to ensure the property is worth buying and living in or you may have to spend more than you bargained for on repairs and replacements.
