Bank REO’s are properties that went through the foreclosure process and were not sold. These properties become properties of the bank thus the term Bank REO or Real Estate Owned.
There are many good deals in the market involving REO’s. Banks do not want to keep the properties long in their possession, and this gives an investor every great opportunity to buy the property and give the bank their best offer.
In order to qualify for an REO, one needs to prepare all the necessary documents to be submitted to the loan officer. A good loan officer can give you fast feedback as to the amount of REO you’re qualified.
It’s important to show a seller or a real estate agent an approval letter from a loan officer to prove that you are qualified to buy the property.
There are many laws regarding foreclosures and the process. Mainly, when the property is in the pre-foreclosure and auction stage, the bank (owner) is only legally entitled to its losses and expenses. This is to say that the bank (owner) is not entitled to gain a profit from the sale. This changes however, after the property has been foreclosed on it becomes an REO .
Most banks have a list of their REO properties, if you ask they will show or give you their list to you to look over. When it comes to buying REO properties do your homework, see how much work you will have to do to the property to bring it up to good standers.
It’s often a belief of most investors that REO properties can be purchased below the current market value. This holds true if you chose to buy the property from an experienced real estate investor who buy REO’s at wholesale price.
Banks would not want to have the REO long in their hand and for this reason, banks often give the property below the market value, however, as a buyer, you need to do a litte work to go through and make the bank approved and accept your offer.
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