Real Estate Investors - Bargains in REOs
Pick up any major newspaper, and you will find an article detailing the growing foreclosure problem that grips America.
In September, 81,312 homes were lost to foreclosure.
During the same month 265,968 troubled homeowners received foreclosure filings which include default notices, auction sale notices and bank repossessions.
Banks are drowning in the number of foreclosed properties that they have in their inventory.
This has opened up a golden opportunity for real estate investors.
Previously banks would not sell a property below their cost.
To make matters worse the bank would not pay one penny to rehab the house to a livable condition before listing it for sale.
Now banks are starting to respond to this glut of inventory by steeply discounting the selling price on their real estate owned (REO) properties.
Banks are highly motivated to remove these non-performing assets from their books.
Almost all bank REO properties require some level of rehab.
Investors are in the enviable position of being able to trade their sweat equity in the rehab of a property in exchange for a discount of 30 percent to 40 percent in the selling price.
Investors are able to pick up bargains, rehab the property and then either sell the property for a quick profit or convert the property to a rental.
The downside of snatching up these bargains is dealing with the bank.
Most banks require special addendums and stipulations that are necessary to be completed before submitting an offer.
Even after submitting an offer it is not unusual to have a bank take several weeks to respond.
Investors can expect to foot the bill to turn on utilities in order to complete an inspection as the bank will not pay for this expense.
Banks will generally sell the property in an as-is condition with no warranties.
The investor bears the burden of doing their due-diligence before buying the property.
Dealing with the bank can lead to frustration on behalf of the investor.
The frustration can be well worth the wait if you are able to purchase a property for almost half of its market value.
Home buyers are not interested in purchasing a property that needs major improvements so agents would not market REO properties.
With the declining housing market and tightening credit market, the pool of home buyers has declined substantially.
Agents have adapted by focusing on REO properties as investors are actively buying in this market.
Investors are finding it easier to find bargains in bank REOs by working directly with real estate agents.
Buying bank REO properties can be a challenging experience, but the potential reward far outweighs the frustrations.
In September, 81,312 homes were lost to foreclosure.
During the same month 265,968 troubled homeowners received foreclosure filings which include default notices, auction sale notices and bank repossessions.
Banks are drowning in the number of foreclosed properties that they have in their inventory.
This has opened up a golden opportunity for real estate investors.
Previously banks would not sell a property below their cost.
To make matters worse the bank would not pay one penny to rehab the house to a livable condition before listing it for sale.
Now banks are starting to respond to this glut of inventory by steeply discounting the selling price on their real estate owned (REO) properties.
Banks are highly motivated to remove these non-performing assets from their books.
Almost all bank REO properties require some level of rehab.
Investors are in the enviable position of being able to trade their sweat equity in the rehab of a property in exchange for a discount of 30 percent to 40 percent in the selling price.
Investors are able to pick up bargains, rehab the property and then either sell the property for a quick profit or convert the property to a rental.
The downside of snatching up these bargains is dealing with the bank.
Most banks require special addendums and stipulations that are necessary to be completed before submitting an offer.
Even after submitting an offer it is not unusual to have a bank take several weeks to respond.
Investors can expect to foot the bill to turn on utilities in order to complete an inspection as the bank will not pay for this expense.
Banks will generally sell the property in an as-is condition with no warranties.
The investor bears the burden of doing their due-diligence before buying the property.
Dealing with the bank can lead to frustration on behalf of the investor.
The frustration can be well worth the wait if you are able to purchase a property for almost half of its market value.
Home buyers are not interested in purchasing a property that needs major improvements so agents would not market REO properties.
With the declining housing market and tightening credit market, the pool of home buyers has declined substantially.
Agents have adapted by focusing on REO properties as investors are actively buying in this market.
Investors are finding it easier to find bargains in bank REOs by working directly with real estate agents.
Buying bank REO properties can be a challenging experience, but the potential reward far outweighs the frustrations.
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