You have probably heard of REO properties, but do you know exactly what they are? Simply put, they are properties that were foreclosed upon, didn’t sell at public auction and were subsequently returned to the bank. REO properties aren’t always just houses; any property, including multiple rental units, commercial buildings and vacant land can be reclaimed by the bank.
Investors can often find REO properties listed on a bank’s website; however, you have to negotiate with a loss mitigator in order to make a purpose. Once you contact the loss mitigator and set up an appointment to view the investment property, you will work directly with that person if you decide to make an offer.
Unlike other types of investment property for sale, when dealing with a loss mitigator at a bank, the process can take a while. No matter how good of a relationship you have with him or her, it’s very unlikely that your first offer on the REO property will be accepted. Remember that the bank has already lost money on the property, and their goal isn’t only to get rid of the property, it’s also to make a profit.
Purchasing REO properties directly from a bank can be a huge hassle. Many would be investors choose to buy them from wholesalers. Sometimes going this route can not only be a much simpler process, but can also be a less expensive path. You would have to find someone who deals in purchasing bank portfolios in bulk (which means they get the properties at wholesale prices). Because they have the advantage of purchasing wholesale properties, you can often get an excellent deal, sometimes as low as 30% under the property’s market value.
Unfortunately, when people find out their house is going to be foreclosed on, they often destroy the property, or at least do significant damage. For this reason, REO properties often need repairs and sometimes even some remodeling; therefore, it’s definitely helpful if you can get the desired property through an independent investor and save that 30%.
Of course, you also don’t have any support by choosing this method. After all, the independent investor has his own interests at heart. Luckily, Realnet has a staff of experienced agents that can help your REO property purchase easy as pie! We have experts on REO properties, short sales and Florida foreclosures.