Buying Foreclosure Properties

As far back as 2004, foreclosure and REO properties were not on most people's radar.

At that time, the housing market was on fire. People slept overnight on the side walk to get in line to buy a new home. Re-sale homes, those with the Seller living in them, experienced multiple offers.

If you were looking to buy a home back then, you had to be willing to accept whatever the seller demanded of you as far as price, terms, and closing dates. It was the consummate Sellers' Market.

The value of real estate was climbing at an incredible rate and many families worried if they would ever be able to own a home. Sometime in mid-2005 property sales slowed down to a normal level and things began to flatten out, as far as values and buyer demand.

By 2006 we entered a Buyer's Market. Today we are still very much in a Buyer's Market.

When contemplating real estate investing, there are several options to consider. Obviously you want to get the most for your money. One way to do this is to invest in a bank owned property, also known as REO (Real Estate Owned) property. The very best reason to buy an REO property is the bargain you can get.

The best bargain is getting what you want at a price that you are willing to pay. Every buyer of foreclosure properties wants to pay less than his neighbor did for a similar property. They want killer financing that only the bank will give someone buying one of their REO properties. Sometimes, the buyer can have both!

If you research the areas of town that you are interested in it will give you a good idea of what you like and what you do not like. Speaking with a loan officer will give you an idea of the type of financing you will use and how much cash you will need to invest.

All of this research will give you information that you need to ask more questions. All of these questions will help you determine what kind of property is right for you and what price will make it a bargain.

There are different ways of buying foreclosure properties.

The first is taking over a pre-foreclosure property from a distressed owner. A buyer gives the seller a certain amount of money and takes over the property. The new buyer takes on the property, warts and all. Any tax liens, problems with the title, or problems with the current lenders now all belong to the new owner. This is a highly risky proposition and should not be attempted by a novice or first time home buyer.

Auctioned homes are also risky, as you may not be able to inspect inside the property.

You will not have the problems of tax liens or lender liens, but you might have huge problems with the actual condition of the property. A cosmetic fixer could become a major fixer in one afternoon.

The last and best way to buy foreclosed properties is through the REO Department. REO means that the lender now owns the property.

The majority of these properties are vacant and you will be able to see them prior to making an offer.

You may use your own lender or let us give you a loan quote.

You may have the property inspected to be sure that you are not taking on any problem that you do not want to deal with. In some cases, we can mutually agree to take care of larger problems so that you can get the financing you prefer.

REO properties don't have any problems with title, tax liens, or anything that would keep you from having clear title to the property.

You can buy an REO property in the same way that you purchase a new or re-sale home. The only major difference is that an REO property, unless negotiated differently, comes "as-is." Another plus, you can always have an inspection before closing to be sure you are not taking on more than you want to handle.

Your own Realtor® can show you most REO properties, along with any other property.

You will notice a different from properties that are still occupied by sellers with equity and those sellers who are selling by way of a "Short Sale". A short sale is used when the seller of the property owes more on the property than it is worth.

Many agents as well as buyers are refusing to look at any property that is going Short-Sale. This is because it can take months and months to get an answer from the Seller's lender as to as to whether or not the offer to purchase is acceptable. Four months is a very long time to wait to find out if the house of your dreams will be yours.

In addition, seller occupied properties will almost always sell for a higher sale price than if it were an REO property. The reason for this is that they must always come with a Seller's Disclosure of the property and its' history.

Another important reason that an owner-occupied property will sell for more money is that they are typically furnished and decorated. Oftentimes, it is hard to imagine how a vacant property will look when furnished.

Many home buyers find themselves in multiple offers on REO property. After you've been out to look a couple of times, it won't take you long to realize what a bargain an REO property can be.