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REO? Homebuyers looking for a bargain often inquire about how to buy real estate foreclosure properties. One of the places people look to buy real estate foreclosure is the “Real Estate Owned,” or REO, properties market. REO properties are properties owned by banks and lending companies. These companies have REO inventory as a result of foreclosing on late payers. Once the home is foreclosed upon, it is put up for auction at a buy real estate foreclosure sale. If there are no bidders, then it goes into the lender’s inventory.
Unfortunately, to buy real estate foreclosure properties from an REO property listing often does not result in a bargain. It isn’t difficult to obtain REO property listings. The easier it is to find these properties, the more competition you will encounter, especially against savvy investors who buy real estate foreclosure properties for a living.
When you buy real estate foreclosure homes from REO lists, the homes inherently do not have any equity, and thus will not be sold below market value. When a home is foreclosed upon, the property goes up for sale at an auction. Along with other bidders, the lender that foreclosed on the property will also bid on it. Typically, the lender will bid the amount owed to them, as well as interest, penalties, and legal fees. If there is equity remaining after this bid, other buyers will bid until there is a winner. By this time, either all the equity will be eaten up, or the lender will retain the property if no one else bids.
All hope is not lost, however. In the past, REO homes were put on the market by the lender without even looking at the property. If the home was torn apart when it was foreclosed upon, no one took the time to fix it before putting it up for sale. They would just put up a sign in the yard advertising the sale, but homebuyers would be too scared to buy them, leaving them for investors. These days, more and more lenders are having these homes fixed up before putting them up for sale. They have found that fixing up the home before putting it up for sale will fetch them a higher price. Investors will generally leave these fixed-up properties alone since they won’t be able to make a profit. This is good news for the homebuyer since you might still be able to get a decent bargain when you buy real estate foreclosure property.
When you buy real estate foreclosure homes, enlist the help of a professional real estate agent. Purchasing a foreclosure is different from buying a house on the private market. A professional can help you navigate this delicate situation and turn it into a good deal for you.
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