Why Buy an REO Property?
An REO is real estate owned by the bank. A bank REO is different from a foreclosure property in that the bank has already tried to sell it at a foreclosure auction and has been unable to receive any bids. As a result, the bank then becomes the owner of the property.
Naturally, the bank does not want to keep the REO any longer than necessary which is where the great opportunity arises for you, the Investor. Obviously, not every REO is going to be a good deal, but with the proper research there are many excellent deals to be acquired.
In order to qualify for an REO, one needs to prepare all the necessary documents to be submitted to the loan officer. A good loan officer can give you fast feedback as to the amount of REO you’re qualified.
An approval letter from the loan officer is enough evidence to show the real estate agent or a seller to prove how fit you are to buy the property.
The bank takes full ownership of the property after going through the foreclosure process and receives no bid.
It’s important to know how much work is needed when buying an REO. You may check the bank’s listing and find out which of the properties would work on you as a real estate agent or as end buyer.
Many real estate investors believe REO properties can be purchased significantly under market value. However, this is rarely the case. An exception to this rule is to purchase real estate owned properties through a private investor who specializes in buying bank portfolios consisting of multiple REO houses. We’ll discuss this option further in a moment.
Banks would not want to have the REO long in their hand and for this reason, banks often give the property below the market value, however, as a buyer, you need to do a litte work to go through and make the bank approved and accept your offer.
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Posted on Aug 26 2009 in Internet Business