Bank Owned Real Estate – Most Frequently Asked Questions
There are a lot of questions that come about amongst real estate investors when it comes to REO properties. They hear that real estate owned by banks are great buying opportunities, but they approach the subject with caution. It just seems to be easier to go to an auction and buy that way than to dig into these investor goldmines that the banks are sitting on.
Below are some commonly asked questions and the answers show you why Banked owned Real Estate is one of the Niches you should be focusing on.
Q. When is the best time to buy REO properties? Any time is a great time to buy bank owned real estate, but the current economic times have made it a great time because of the number of properties that banks are hoping to get off their hands. Competition is also down because of the economic situation and decline in housing prices.
Q. Where do I find REO properties? The banks own these properties, so you will get in touch with the bank to see what it is they have on their hands that they hope to get rid of. They will be very good about telling you what it is they need to get off their hands.
Q. Are financing options available for bank owned properties? This is something that is going to depend on the bank. As an investor, it is better if you offer cash because this gives you more bargaining power. Sometimes the bank may require just cash. Other banks may welcome financing because they gain even more income, but you may have to pay a higher price.
Q. Why are REO’s better than auctions? Something you may not be aware of is that banks usually bid on their own auctions to get a higher price. When they don’t, the property then becomes real estate owned. This means the bank will become focused on getting rid of the property.
Q. Don’t banks want to get as much money as possible? Banks do want to get as much money as possible at first. That is why they bid on their own auction, but will try to later control the cost. Later on, their concern is with their lending power being reduced by the fed because of too many foreclosures and REO’s on their hands.
Q. Can real estate agents help? Real estate agents can help. They may have lists of REO properties and can help lead you in the right direction. They also have access to the multiple listing service (MLS) where some of these properties may be listed.
As you can see, REO properties are fantastic investments for the real estate investor. You’ll find that investing in an REO property can be much more productive than any other acquisition method. You are left with more room to obtain a profit.
You just need to be mindful of the preferences of the bank as far as whether you can only purchase with cash or through financing. Remember that if you have some cash that you need to get rid of, this is a great way to do it, especially if you need to get that cash off of you for tax purposes.
All-in-all, real estate investors really need to look into REO properties. Not only is the investor presented with a great opportunity, but buyers are also presented with an affordable property. Everyone wins in the end.
by Craig Picard