Anyone looking at purchasing a property should go down every avenue to assure they are making the best decision for their bottom line. One of the best ways to get the best value for your investment is to explore the option of purchasing a real estate owned (REO) property.
A real estate owned building is the property of a bank or lender. The property was previously foreclosed, and the original owner is looking for a new buyer. These circumstances may offer you an opportunity to make an excellent investment. Here is everything you need to know about buying an REO property.
Why Buy an REO Property?
There are two reasons an REO property may be of interest to you. One, it might be an easier and cheaper process. Banks don’t want to own properties. They want people to pay the loan on the property. That is how they make their money. After not getting paid for so long, they might be willing to sell for cheaper to just get rid of it.
With that being said, you may be able to negotiate to buy the property “as-is.” Therefore, if you’re buying a restaurant or apartment building, you may be able to keep appliances and other expensive items.
While that seems like a perk, it may turn into a detriment. Foreclosed people who are upset may damage some of these items, causing the buyer added expense. Do your diligence when you are searching.
How to Buy an REO Property
The process of buying an REO property isn’t much different than browsing for a non-foreclosed property. Search through a bank or lender’s REO listings.
If you are new to the process, you can also reach out to a real estate agent. They should be able to filter a list of REO properties to meet your finances.
Once you have an idea of what’s out there, talk to a lender. See how much you can really work with and then begin looking for a buyer’s agent. Interview around. Make sure they have experience negotiating with banks over purchasing an REO property.
Buy Your REO Property
See something you like, and you’re ready to make an offer? If the listing is newer, the chances of getting the price for much lower are slim. However, if the listing has been active for over thirty days, try to negotiate.
Closing may be a bit difficult, which is why it’s helpful to have an experienced agent on your side. The bank may take a long time to respond to your offer. They might even make changes to your contract before signing. Just make sure you read everything carefully before putting pen to paper.