Foreclosures can be divided between pre-foreclosures (from
filing of public notice to eviction) and REO's (houses taken by banks and
vacant right now).
First time homebuyers or
real estate investors, especially those new to real estate investing, will
prefer bank foreclosure to any other form of property buying because Real
Estate Owned (REO) properties offer the safest, easiest method of acquiring
property.
If the property fails to
sell at auction, or if the lender ends up as the highest bidder, the home
becomes REO, or "real estate owned" by the bank. Lenders then try to sell these REO properties
on the open market, often through a real estate agent or third-party marketing
company.
In markets where real
estate is entering a slowdown, especially in those areas where foreclosure
filings –notices of default are increasing, lenders face downward market pressures. Consider, lenders are not chartered to own
and manage (REO) property in fact, they face scrutiny and pressure from state
and federal regulators to dispose of foreclosed properties quickly therefore, banks
will not hold property. They will sell at auction, no matter what the price is.
This process takes time, but favors those investors or homebuyers who are
diligent and knowledgeable regarding when and in what time to purchase
foreclosure property.
6 Reasons to
Like Bank Owned (REO) Properties:
- No property title issues - once you close, you
get clean title policy without exceptions.
- No back taxes - banks have paid everything at
closing.
- House is vacant - I can go there as much as I
want before I close.
- I do not have to argue about
"correct" amount of equity with the homeowner.
- You can pick an area - and start buying every
good deal in sight.
- Dealing directly with the bank, can eliminate
the 6 percent sales commission if they act fast - before the bank lists
the property with a real estate agent
Nevertheless, buying bank foreclosure
remains the safest method of buying property. The process is easy and many risks
associated with other forms of purchase are either eliminated or reduced in the
bank foreclosure.
Finding Bank Foreclosure
Listings
generally, lenders are reluctant to share their REO lists with the public,
although perseverance and knowledge can help, the best option is to develop a
network of contacts. To buy
bank foreclosure, scout for announcements or notices in the newspapers or from
the courts. You can also contact a real estate agent for such notices or use a
listing service.
A number of web sites listing
bank REO foreclosure listings offer trial memberships, try a number of
foreclosure listings sites and evaluate which offers the best most current
listings. Take advantage of the free
trial period offered evaluate their listings. The sites should offer the latest
listings with daily/monthly updates.
About the Author
Offering insight into
foreclosure investing strategies
, John Appleseed uses his 15 years of real estate investing experience to write on
bank foreclosure at www.forclosedproperties.com.
