Buying bank owned properties
There is a lot of interest in buying bank owned properties these days. A lot of information, some good and some bad, is floating around about the subject. Often the information offered is for sale, with the promise that you can make a lot of money with little effort once you know the secret formula.  The fact is that there are no secrets, and to make money does require effort.

Whats an REO?
REO stands for Real Estate Owned.  These are properties that have gone through foreclosure and are now owned by the bank or mortgage company.  This is not the same as a property up for foreclosure auction.  When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees accumulated during the foreclosure process.  You must also be prepared to pay with cash in hand.  And on top of all that, youll receive the property 100% as is.  That could include existing liens and even current occupants that need to be evicted.  A REO, by contrast, is a much cleaner and attractive transaction.  The REO property did not find a buyer during foreclosure auction.  The bank now owns it.  The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.  Do be aware that REOs may be exempt from normal disclosure requirements.  In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that normally requires sellers to tell you about any defects they are aware of.

Is it a bargain?
Its commonly assumed that any REO must be a bargain and an opportunity for easy money.  This simply isnt true.  You have to be very careful about buying a REO if your intent is to make money off of it.  While its true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for it.  When considering the value of a REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale.  The bargains with money making potential exist, and many people do very well buying foreclosures.  But there are also many REOs that are not good buys and not likely to turn a profit. 

Ready to make an offer?
Most banks have a REO department that youll work with in buying a REO property from them.  Typically the REO department will use a listing agent to get their REO properties listed on the local MLS.  Before making your offer, youll want to contact either the listing agent or REO department at the bank and find out as much as you can about what they know about the condition of the property and what their process is for receiving offers.  Since banks almost always sell REO properties as is, youll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it.  As with making any offer on real Estateeee, youll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.  After youve made your offer, you can expect the bank to make a counter offer.  Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.  Realize, youll be dealing with a process that probably involves multiple people at the bank, and they dont work evenings or weekends.  Its not unusual for the process of offers and counter offers to take days or even weeks.

News Flash!

Foreclosures experienced a 72% rise since the beginning of 2005

RISMEDIA, October 6, 2006—Foreclosures experienced a startling rise this year – up 72% since the beginning of 2005, according to RealtyTrac. The increasing foreclosure rate is unveiling a different breed of real Estateeee "flipper" looking to turn a profit on investtment property purchased up to 20% below market value.

"In the midst of a slowing real Estateeee market, rising interest rates and salaries that are not keeping pace with standard of living increases, we have seen a dramatic increase in foreclosures nationwide," said David Nilssen, CEO of Guidant Financial Group. "This is not great news; however it does create opportunities for savvy investtors looking to obtain properties at below market value."

Nilssen cautioned that the foreclosure-investting process can be risky. "A great deal of research should be done to ensure that the investtment is sound and clear of additional encumbrances that could affect the deal."

Information about foreclosure properties is found in many places including foreclosure Web sites, legitimate third-party foreclosure listings, educational Web sites, private banks, auction houses, and local tax-collection agencies. The number of foreclosure listings increases every day, with the rise forecasted to continue. Foreclosures are non-traditional investtment options that can provide profitable rewards when proper research is conducted.

More foreclosures emerge as interest rates climb and the 30% of loans that were originated with adjustable-rate mortgages significantly increase. Those faced with increasing mortgage payments are attempting to liquidate in a market where housing inventory is increasing and the buyer pool is shrinking. The softening market and the rise in interest rates and accompanying payments may spell disaster for many people who could be forced to sell at a loss out of necessity. Yet, as with most cases in investting, one individual's loss is another's gain. As homes become available at up to 20% below market value, large profits can be realized by savvy investtors.

As the real Estateeee market shifts gears, a growing number of investtors are learning that they can utilize their IRA or 401(k) funds to make these types of investtments. Based on IRS law it is perfectly legal to use retirement dollars for these and many other types of investtments within an IRA – all that is needed is someone to setup the structure to do so. Once the structure is established, investtors can gain checkbook control of their retirement funds and begin making investtments that yield higher and more secure returns than those typically yielded within the stock market.

If you really have the time and money to invest in a Foreclosure. I can and will work with you. Just get in touch Today!