Hint “They’re really not as bad as that picture suggests.”
Bank foreclosure real estate, also referred to as REOs (Real Estate Owned), is foreclosed real estate that is owned by the bank due to an unsuccessful foreclosure auction. There are several reasons the home may have not sold at the auction. The most common reason is negative equity- the bank foreclosure real estate is worth less than the amount owed to the bank. Of course, the bank seeks to receive the outstanding balance of the original loan; therefore, the minimum bid for the bank foreclosure real estate is usually the amount of the outstanding balance of the original loan, plus interest and any additional fees. No smart investor or buyer will consider bidding on such a property.
Nevertheless, an unsuccessful sale will not stop the bank from trying to make an attempt to get the bank foreclosure real estate sold. The bank will consider removing some or all liens and fees on the bank foreclosure real estate in order to get it on the real estate market and resell it to the public. The resell process may be retrying an auction or working through a Realtor. Even seemingly terrible deals might yield something great. Check out Leafy Podcast Episode 5 “Do you know how to budget?” with Karen Ford. She teaches people how to budget, is a best-selling author AND she bought a bank foreclosure once for $10, it turned out to be a nightmare meth house with warning signs but she ended up making a great profit on it. It’s a great story so check it out.
Although this is a hot market for real estate investors, it’s extremely competitive and the foreclosure pool is not as large as it used to be. Real Estate investors take an eager interest in bank foreclosure real estate property for many reasons, the chief of which is the ability to buy low and sell at market or higher with improvements.. The market of foreclosed homes may be larger than other markets depending on the area; but, not always suitable for some investors. The foreclosed property may not meet some important needs, such as move-in ready. Many foreclosed properties will need some sort of rehabilitation and at the very least, cosmetic work done to make them attractive to buyers. Nowadays home buyers and investors alike are scrambling through the market of bank foreclosure real estate looking for better deals. As mentioned, though many bank foreclosures are in poor condition, the low sale price of the home highly compensates for the property poor condition if the purchaser has factored in the right adjustment for improvements.
Investing in bank foreclosure real estate property offers a great return for investors when done properly. Bank foreclosure real estate by far offers greater deals than typical foreclosed homes. As an investor you must consider all your options and make sure you get the bank foreclosure real estate property at the best price that allows for a decent rehabilitation and turn over. Hopefully, the bank foreclosure real estate will give the investor rewards; such as a larger return in profit, either through renting the home out or through selling the home.
There are several ways to search for bank foreclosure real estate property. You can search the Internet, magazines, and newspaper listings. There are also HUD-based sites you can check as well. The Internet can lead you to thousands maybe millions of connections. Here you can view listing by state, banks, county, and much more.
You should also invest time in finding a good real estate agent. If they know what you are looking for, they can save you a lot of time and work. They can also help you determine the true market value of the home you are considering investing in.