REO's are a direct result of failed foreclosure auctions Why do foreclosure auctions fail Why is buying REO property simplest and nearly 100% risk free What are Banks/Lenders willing to offer buyers of these properties
How Can You Tap Into the Bank Crisis With High Number of Foreclosed Homes: REO Secrets Revealed
There are many types of properties. Many people hire a realtor to help them or MLS and others go another route; REO’s or Real Estate Owned properties. This is the way lenders hold property on their books that they have taken back from owners.
REO’s and Foreclosures are different:
REO’s are a direct result of a failed foreclosure sale or auction, the property reverts back to the bank. Because a borrower cannot make the payments, the lender has the right to sell the property regardless of whether the owner has moved out or not.
Reasons why foreclosure auctions fail to sell the property:
· Loan Balance on the property
· Accrued interest on the property
· Attorneys fees
· All costs associated with Foreclosure Process
In order to Bid on a Foreclosure you must have:
· Cashier’s check in hand
· May have up to 30 days to secure the loan
· Buy property in as-is condition
· May need to evict the owner if they are still there
· Property may have certain Liens attached to it
· Lots of requirements/Less Benefits
Many buyers prefer buying an REO because this is the less stress more benefits way to purchase a property.
REO Purchase:
· Lenders want a quick sale and may offer incentives and benefits to the potential buyer
· Buyer could possibly save 20%-30% off the fair market value of a property
· REO’s are the simplest way for a first time homebuyer or an investor to obtain a property
· Lenders give full access to the property for inspections
· Remove all liens and back taxes on the property
· Allow negotiations on Rehab costs, interest rate, closing points and loan amount
Purchase is defined as: nearly 100% risk free and they may accept a less than normal down payment.
· Always do your due diligence homework look into what you’re getting before you enter into agreement with the lender.
· Bank/Lender will evict the tenants/owners, remove any Liens/Back Taxes, and do the basics.
· Lenders won’t make any repairs they sell in as-is condition which is condition it was when it was repossessed.
· You should hire a home inspector to find out true condition of property
· Find out what the “comps” are, what is the house worth in today’s market
· The lender may counter your offer if they feel you are offering too little. The Lender is trying to maximize their gains on property-you can always make a new offer
· Bank/Lender draws up the contract for Sale-You may want to have a Lawyer check this contract to be sure you understand all the details.
· You will want to have an inspection contingency written into this contract if not already inspected before making your offer
· If you are working with a Realtor, they will know the ropes and can guide you through the process
· Since the bank approves by committee, it may take two days to two weeks for approval to come through
· Know who will deliver the approval to you
REO’s Buying-Reasons Foreclosure Auctions Fail:
· Nothing wrong with the property, they probably asked too much at the auction because of all the costs associated and the loan amount
· Bank’s lose money on no-producing assets like REO’s
· Could be viewed by shareholders as mismanagement if foreclosure stays on books too long
· It is in the banks best interest to sell the property and invest the money because an empty house doesn’t make any money for them
To Generate a Quick Sale Bank May:
· Offer savings from 20%-30% off Market Value
· Simplest way to buy foreclosures
· Access to property
· No back taxes or liens to worry about
· Negotiate rehab costs, interest, closing costs
· Almost 100% risk free
· Smaller down payment and better terms than a regular closing
· Bank ensures a clean title for you
If you enjoyed this training and want to gain more knowledge in the Foreclosure/REO buying procedures and secrets contact me:
