As a result of the housing crisis that hit various regions particularly hard, a large number of REO-Real Estate Owned opportunities surfaced in the market. It is now increasingly common to find these “bank-owned” real estate properties. If you are in the process of investing in a real estate property and shopping for a home, you should keep the following all of the following in mind before you buy this type of a property.
REO or bank owned real estate properties are properties that have undergone foreclosure and now the lender owns them. This means that the property is being sold by an instituition like a bank that had lent it to the former owner. These can be great opportunities!
Budget appropriately: Most lenders sell REO real estate properties “as is,” so the costs of repair and/or renovation as well as the time required for the completion of those tasks should be considered. Usually, when a property is foreclosed, it is properly maintained and necessary repairs are made by the bank or the lending institution, but some repairs and/or renovation is still required.
Be prepared: If you are serious about investing in an REO real estate property, you should act upon this real estate transaction as quickly as you can, especially if a lender has approved you for financing. If you manage to find an REO property worth investing in, then it will be better for you to make the offer as soon as possible. REO real estate properties tend to attract lots of investors and most of them tend to move fast.
Inspect the property: As with any real estate transaction, another important step that you will have to take is to get the real estate property inspected. Since REO properties have often been vacation for a considerable period of time, inspecting the property becomes even more important.
Know the market: If you are interested in investing in a REO real estate property, finding a “deal” will not be difficult. However, it is more important the price you offer is comparable with other similar properties in the neighborhood. Negotiating is a common tactic that is utilized by most banks and other lending institutions, but they ultimately need to sell the property at or close to the current fair market value. You can seek guidance from a real estate agent.
The process of buying an REO property is quite similar to that of buying any other home. Of course, the buying process includes and additional addendum and disclosures, and a real estate agent can provide guidance to get through them.
Earn approval or pre-approval: When it comes to real estate transactions, this step tends to be quite critical. By taking time step, you will be able to budget appropriately and find a property you can afford to buy, while sellers will realize that you are a serious buyer.
Make an offer: You will be able to determine a fair price with the help of your real estate professional and once you have, you can make an offer.
If you want to invest in a property that will be free of title liens or any other claims, then you should definitely go looking for REO-Real Estate Owned opportunities. Moreover, since the lending institution has already taken care of the eviction process in the case of these properties, investing in an REO property will save you a significant amount of energy and time.