Does REO really mean Real Estate Owned? Bank realestate owned properties are hot prospects.
REO is the latest buzz word in today's real estate industry. REO stands for Real Estate Owned; meaning the property is owned by the bank. Before property reverts to the bank, an attempt must be made to sell it through a real estate foreclosure auction. This is an important fact to keep in mind.
Many people think REO properties are dirt cheap, but this is rarely the case. Realize that foreclosure homes have no equity and an inflated mortgage. In other words, more money is owed on the note than the house is worth. This is the main reason they don't sell at auction.
Most banks have a loss mitigation department to help them keep losses to a minimum. It is the job of loss mitigators to get as much money as possible from the real estate properties they hold. At the time of writing, banks are accepting offers of ninety-five cents on the dollar. If the mortgage note balance is $100,000, expect to pay $95,000 or more.
Financial experts suggest banks will be forced to go as low as sixty-five to seventy cents on the dollar in the future. This makes for fertile opportunities in real estate investing. If you are already investing in real estate, or plan to, now is the time to develop your strategy.
Perhaps one of the biggest advantages to investing in REO property is the fact that everything is already taken care of. The bank has eliminated the mortgage, taken care of eviction, removed liens and in some cases taken care of repairs. In essence, you receive a nice package with a pretty bow. All you have to do is make a reasonable offer and the property is yours.
There are many angles you can approach in your negotiations with the bank. These depend upon the type of property you want and what you are willing to do to get it. Some people seek out distressed properties and include renovation proposals within their offer. Others are seeking properties they can flip quickly. Many are simply looking for a good deal on a house they can call home.
It's best to work with an REO specialist when engaging in this type of real estate transaction. An REO specialist can guide you through the process, help you locate properties and ensure you submit proper documentation. Just one missing form can cause you to lose out on a lucrative real estate opportunity. Are you willing to risk that?
Most banks list REO properties on their website. They usually include contact information, making it easy for you to connect with the proper person. Remember, these individuals can make or break your deal, so always approach them with respect. Being friendly and courteous will get you a lot further in the real estate game.
Chances are good the bank will respond to your initial offer with a counter-offer. Prepare for this in advance and give yourself time to create solid counter-offer to them. If there are numerous repairs or major renovation, take photos and submit along with your proposal. Either request the bank take care of the repairs or adjust the selling price to offset the costs. Thorough documentation and professional presentation can help you seal the deal.
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Published on February 27, 2008 at 10:13 PM | Comments: 1