Buying Bank Owned REO Homes
Once a foreclosed property is purchased by the bank at the public foreclosure auction sale, it reverts back to the bank and becomes a bank-owned REO property. Anyone can buy a bank-owned REO. The challenge for real estate investors is to reach the person who can make the decision to sell the bank-owned property. Each lending institution has different rules and requirements on how they sell bank-owned real estate. Contact the lender and find out what they require to purchase an REO property.
Most banks are eager to negotiate. After all, the lender has the biggest financial stake in a foreclosed property. The lender made an 80 percent, 90 percent, or even a 100 percent loan to the borrower to purchase the property. Therefore, the lender who may have a growing inventory of bank-owned properties is a motivated seller. Lenders want to remove the properties from their inventories. Bank officers in the loss mitigation department will want to work with investors and homebuyers because they want to minimize the bank’s loss. Some investors call bank-owned properties repos, which is short for repossessions.
Frequently, lending institutions hire real estate brokers to market and sell their REO inventories. Smaller local banks may use one real estate broker to handle their REO properties. Larger regional and national banks employ hundreds of brokers to handle their inventory of thousands of foreclosed bank-owned REOs.
Buying a lender’s real estate owned property is a lot less complicated, involves less competition and usually doesn’t expose investors to as much risk as buying in other phases of the foreclosure process. Investors should consider working with several lenders.
Probably the best way to learn about the availability of a lender’s bank-owned inventory is to approach the REO department in person and meet the REO manager. Establishing a personal relationship with the REO manager at the bank is the only viable way to get into the REO business.
RealtyTrac gives members the listings, tools, and resources necessary to find and buy REO homes, whether you are new to buying real estate or a seasoned commercial property investor. A RealtyTrac membership also consists of live customer support, educational materials, access to your credit information, and much more. We'll even send you daily email notifications of newly listed REO homes that match your criteria!
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