With increased foreclosures over the last few years, shrewd San Diego real estate investors are pulling ahead of the pack by using strategic tactics. One way to profit in the current real estate climate is by acquiring REO properties.
People looking to become homeowners also benefit from these properties. All it takes is a little patience and research to make such properties work in your favor.
After an unsuccessful turn on the auction block, a property goes back to the bank. It becomes an REO property; which stands for Real Estate Owned. Many auctions don’t even receive bids, if the value of the property is overshadowed by the price including fees and interest. No one is looking to buy a property at a huge loss. The bank can’t just let the property disappear, though, so it ends up as an REO property.
One thing to remember about REO properties: they may not be in the greatest shape. The entire time a property is on the auction block or held by the bank, it may still have disgruntled residents living in it. An unattended property may succumb to the forces of nature with no one there to do basic maintenance.
Banks look to sell the property “as is,” but will sometimes repair damages in order to sell a home quickly. They may give you a pest control certificate, but only if you demand one in advance. Investigate the property thoroughly and take note of any structural concerns. It may be worth it to invest a bit of money into improvements, but you’ll want to know this ahead of time.
Call the bank or have your agent contact them. You’ll want them to answer a few other questions before making an offer. Find out what work the bank has agreed to do on the home, or if there is an “as is” clause. Find out if there are any inspection reports. You’ll also want to know how long it will take the bank to accept or decline your offer.
Remember, an REO property either didn’t receive an auction bid or didn’t make the reserve. Find out why; was it’s because of liens against the property, damage to the home or lack of equity?
A bank is usually willing to lose a little money on an REO property. A small loss is better than the penalties charged by the government for holding the property and the opportunity cost of an unsold property. If you do your homework and inspect the property thoroughly, you may find a great deal.
Purchase a property in your comfort zone, but don’t put too many demands in the purchase offer. If it has too many terms of sale, it will likely be turned down. Banks want to work with buyers who keep the transaction simple and close in short order.
If you play your cards right, you may make some money by purchasing and selling REO properties. If you’re looking for a home yourself, you may find a great home for less. Either way, REO properties may offer a benefit to your life and pocketbook.
Kari Shea is a real estate professional with Shea Real Estate & Investment Groupwww.shea-realestate.com.
[tags]REO property,real estate owned properties,bank owned properties,San Diego[/tags]
|
|