Bank owned REO properties are a hot commodity these days. REO is an acronym for "real-estate owned." It is an attractive option for investors and home buyers looking to get hold of a prime property on the cheap for much less than the market valuation for a non-distressed property.
It's important for buyers to understand how banks end up with REOs and why it's such a good deal. It is also a good idea to get hold of a checklist of things to do when buying a distressed property. The REO classification kicks in when the home is still in the lender's possession even after an auction. This is usually the case when the lender's bid is the highest, or if no one else bids on it.
The lender, in this case, may be a mortgage lender or bank. It can also be an insurer underwriting a loan that has foreclosed on the property. Another possibility is that it is a government agency that took possession of the property after placing a lien on it to collect a tax debt, legal award or other debts.
Following the 2007-08 real estate market crash, millions of homes got foreclosed and many of them subsequently landed up in the possession of the banks and lenders as REOs. Most are in states such as California and Florida that were hit the hardest by the crash. There are many ways to find a distressed property in a specific region, county or municipality within a chosen state.
The best way to do this is to start contacting the major mortgage lenders and banks that have physical branches or offices in the desired location. It's likely they will all have website listings of available REOs and foreclosed homes that are up for auction. Alternatively, this information can be obtained from their loss mitigation division or from the consultant firm handling their foreclosures and seized asset disposal.
Broadly speaking, each bank has its own rules about what a buyer needs to do to get hold of one of their REOs. In any case, due diligence including a title search and valuation must be done. An inspection is among the most important things to do before making a deal, since a distressed property is more often than not in dire need of repairs before it can be occupied.
Also note that lenders will want to sell it off "as is, " and the cost of the repairs is usually borne by the buyer. Factor this into the total purchase cost before making an offer for the place. Most banks and lenders selling REOs make it easy for the new buyer to apply for financing that covers the full purchase price.
Banks stuck with REOs have no interest in holding on to a property as an investment. The banker's sole concern when it comes to bank owned REO properties is to liquidate the asset and recover the sum owed by the original borrower. The unpaid balance on the mortgage is therefore a good marker for setting the asking price, regardless of what the market value of a similar non-distressed property would be.
It's important for buyers to understand how banks end up with REOs and why it's such a good deal. It is also a good idea to get hold of a checklist of things to do when buying a distressed property. The REO classification kicks in when the home is still in the lender's possession even after an auction. This is usually the case when the lender's bid is the highest, or if no one else bids on it.
The lender, in this case, may be a mortgage lender or bank. It can also be an insurer underwriting a loan that has foreclosed on the property. Another possibility is that it is a government agency that took possession of the property after placing a lien on it to collect a tax debt, legal award or other debts.
Following the 2007-08 real estate market crash, millions of homes got foreclosed and many of them subsequently landed up in the possession of the banks and lenders as REOs. Most are in states such as California and Florida that were hit the hardest by the crash. There are many ways to find a distressed property in a specific region, county or municipality within a chosen state.
The best way to do this is to start contacting the major mortgage lenders and banks that have physical branches or offices in the desired location. It's likely they will all have website listings of available REOs and foreclosed homes that are up for auction. Alternatively, this information can be obtained from their loss mitigation division or from the consultant firm handling their foreclosures and seized asset disposal.
Broadly speaking, each bank has its own rules about what a buyer needs to do to get hold of one of their REOs. In any case, due diligence including a title search and valuation must be done. An inspection is among the most important things to do before making a deal, since a distressed property is more often than not in dire need of repairs before it can be occupied.
Also note that lenders will want to sell it off "as is, " and the cost of the repairs is usually borne by the buyer. Factor this into the total purchase cost before making an offer for the place. Most banks and lenders selling REOs make it easy for the new buyer to apply for financing that covers the full purchase price.
Banks stuck with REOs have no interest in holding on to a property as an investment. The banker's sole concern when it comes to bank owned REO properties is to liquidate the asset and recover the sum owed by the original borrower. The unpaid balance on the mortgage is therefore a good marker for setting the asking price, regardless of what the market value of a similar non-distressed property would be.
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