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Buying and selling bank owned REO properties can be a profitable venture. Prospective homeowners can purchase the homes of their dreams without having to spend too much money on the purchase. REO stands for Real Estate Owned by banks. They are properties that have been foreclosed on and need to be sold so that the lender can recover its money. Buying these properties is much different from purchasing properties that have not been foreclosed on.
Failing to pay a mortgage according to the specified terms and conditions leads to foreclosure. Before the auction, the lender is required to send a notice of default to the defaulting property owner giving him or her three months to make up for the delayed payments. If this is not done, a public auction will be held to sell the asset.
As with any other auction, there is normally a reserve price below which the asset cannot be sold. When potential buyers start bidding for the asset, and fail to meet the reserve price requirement, the bank will take over the asset and exert ownership rights over it. This is when the asset starts to be referred to as REO.
The process of acquiring an asset that is undergoing foreclosure can be very stressful. This is especially the case in a judicial process where the law gives the borrower up to 12 months to buy back the property. Short sales and other pre-foreclosure sales are also very tedious. It is this long process and voluminous paperwork that forces many people to ignore or avoid these deals.
The best thing about buying REO property is that they often have clean titles. Banks normally sell them through real estate companies. The transactions are just like any other real estate transaction because the bank is the legal owner, and you are a willing buyer. The amount of paperwork is also minimal compared to pre-foreclosure sales.
Knowing your market is very important when you want to buy real estate property. You should be familiar with the average prices of one, two, three and four bedroomed houses in the area. This will enable you to determine whether or not a house is worth investing in. An inspection must also be done by an expert to ensure that that the property is structurally sound. If it is extensively damaged, you will be better off considering other deals.
You cannot make an offer if you do not have the money ready. Therefore, you need to arrange for financing with your bank before you make an offer. Great deals often do not stay on the market for long. They are usually bought very fast. There is therefore need to prepare yourself and act very fast to ensure that you get the property you want.
Some bank owned REO properties need minor repairs while others need full renovation. These repairs are necessary because the property cannot be sold as it is, or the buyer cannot live there under the existing conditions. Renovation and repair costs therefore need to be included in the property acquisition budget. The internet can help you to find a property that meets all your special requirements.
Failing to pay a mortgage according to the specified terms and conditions leads to foreclosure. Before the auction, the lender is required to send a notice of default to the defaulting property owner giving him or her three months to make up for the delayed payments. If this is not done, a public auction will be held to sell the asset.
As with any other auction, there is normally a reserve price below which the asset cannot be sold. When potential buyers start bidding for the asset, and fail to meet the reserve price requirement, the bank will take over the asset and exert ownership rights over it. This is when the asset starts to be referred to as REO.
The process of acquiring an asset that is undergoing foreclosure can be very stressful. This is especially the case in a judicial process where the law gives the borrower up to 12 months to buy back the property. Short sales and other pre-foreclosure sales are also very tedious. It is this long process and voluminous paperwork that forces many people to ignore or avoid these deals.
The best thing about buying REO property is that they often have clean titles. Banks normally sell them through real estate companies. The transactions are just like any other real estate transaction because the bank is the legal owner, and you are a willing buyer. The amount of paperwork is also minimal compared to pre-foreclosure sales.
Knowing your market is very important when you want to buy real estate property. You should be familiar with the average prices of one, two, three and four bedroomed houses in the area. This will enable you to determine whether or not a house is worth investing in. An inspection must also be done by an expert to ensure that that the property is structurally sound. If it is extensively damaged, you will be better off considering other deals.
You cannot make an offer if you do not have the money ready. Therefore, you need to arrange for financing with your bank before you make an offer. Great deals often do not stay on the market for long. They are usually bought very fast. There is therefore need to prepare yourself and act very fast to ensure that you get the property you want.
Some bank owned REO properties need minor repairs while others need full renovation. These repairs are necessary because the property cannot be sold as it is, or the buyer cannot live there under the existing conditions. Renovation and repair costs therefore need to be included in the property acquisition budget. The internet can help you to find a property that meets all your special requirements.
1 comment:
Thanks for this informative post.
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