Many real estate investors are aware of the incredibledeals available when you purchase bank-owned property (also known by REOproperty). However, most people don't know why they should learn how REOs arepurchased. This articlewill discuss 7 reasons why real estate investors need to learn how banks canbuy REOs.
REOs can present some challenges. Many properties are indire need of major repairs or renovations because they have been neglected.
REO deals can take several months to close and it issometimes difficult to find the right bank personnel to help you negotiate.
If you're able to get the right price, REO propertiesoffer tremendous upside potential and quick money from wholesaling. Let's take a look at sevenreasons real estate investors should learn how banks can buy REOs.
Whyyou should wholesale for quick cash. There are many REO properties thatneed to be fixed up and you can purchase them at a low price from motivated banks.This gives you a great opportunity to make "wholesale" deals (dealsin which you buy low and then sell the contract to another investor to make aquick profit). You canoften find REOs with minor or only cosmetic repairs. Then, do the work yourselfbefore selling the deal to a retail investor.
Reason#2 - Large Available Inventory. The inventory of REO properties is at an all-time high, withforeclosures at record highs. Because ofthis large inventory, you now have more REO properties than ever before. This means your chances of finding a REO property that suitsyour needs are better than ever before.
#3- Amazing Prices from Highly Motivated Sellers. Banks do not own property. The last thing banks wantto do is take back the property in foreclosure when they lend money. They will often offer significant discounts to get rid ofreal estate foreclosures. This means thatsavvy investors in real estate know how to purchase REOs at great prices.
#4- Favorable Seller Financing. Because banks are in the business lending money,they can offer better terms to those who find themselves in the situation ofselling real property. Ask about financing options when you negotiate for REOs.
#5- No Cost Expertise. Many agents are looking to expand or sustain theirbusinesses in these declining markets and have developed expertise in dealingwith REOs. Theirexpertise can help you navigate the complex aspects of the REO buying andfinding process. The bank will pay them for their assistance.
#6- Convenience. Banks are eager to move their properties, so theymake it easy for customers to inspect and see the REOs that they haveavailable. Your effortsto inspect their house may cause them resentful. This emotion can be removed by negotiating with the bank.
Reason#7- Professionalism. For many homeowners, particularly those facingforeclosure, it can be difficult and emotionally draining to deal with. You can trust that youwill be dealing with someone who is interested in the outcome of the deal.Banks are all about business.
These 7 reasons real estate investors should learn howbanks buy REOs are a strong argument to add REO buying to their existingportfolio of real estate investing activities. It's worth looking intoREO investing and buying if you haven't.
