You’ve likely heard a lot of buzz about buying foreclosure properties at auction. While auctions often get bidders good homes at great prices, they are becoming overcrowded and often result in bidding wars. Consider using another strategy: hunt after good REO properties.
What is an REO property? It is foreclosed house that has gone to auction and failed to sell, either because it received no bids or the highest bid was lower than the minimum price the bank would accept for it. When the house is not bid on or doesn’t get as much money as the bank wants for it, the discounts on the house often become even greater, since the bank doesn’t want to hold on to the property for any longer than it has to.
When you buy an REO property, there are many advantages. All liens against the property are removed. Unlike foreclosure homes for sale at auctions, you are able to inspect the house before you purchase it. If you find things in the home that need repair, propose the bank fix them for you. If they know you’ll buy the home with the specified repairs, they may be inclined to make them in order to sell the house quickly.
REO homes are listed with all other MLS listings in your area. A good realtor, however, may have inside connections with other Realtors to find out about new REO listings before they are released to the general public. In hot markets like San Diego or Manhattan, REO properties often have more than one bidder. A real estate agent will help you submit the most attractive bid possible.
Speed is the name of the game when you want to get a great price on an REO property. You need to find a good real estate agent that specializes in this type of transaction. Then, have the agent find some of the most promising properties in your area. Quickly inspect the properties and work out a starting and maximum bid with your agent for the one you are most interested in purchasing.
Remember this key point. No matter how much you like a property, it defeats the purpose of looking for a great REO deal if you overbid. Your real estate agent should protect you from overbidding. If you can get a better deal elsewhere, they will inform you. Make sure you listen when your agent tells you to reconsider your offer.
Banks don’t want to hold on to REO houses any longer than they have to. They are often willing to make minor repairs, but don’t go overboard. Keep in mind you are likely not the only person bidding on the property, so act accordingly. Be aware that you can always ask the bank how many offers they currently have on the home to help you decide on a bid.
When you are thinking of buying an REO property, submitting the right bid is almost as important as finding the right property. Experienced real estate agents have the inside track when it comes to finding a good property to bid on. They also know the proper procedure for getting you a great deal while keeping you from getting burned on a bad property.
Whether you are looking to purchase an investment property or a new home, consider the REO market in your area. An experienced realtor will be your best ally throughout the entire process.
Kari Shea is a real estate professional with Shea Real Estate & Investment Groupwww.shea-realestate.com.
[tags]REO properties,San Diego,real estate owned properties,bank owned properties[/tags]
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