Foreclosures can be divided between pre-foreclosures (from filing of public notice to eviction) and REO's (houses taken by banks and vacant right now). First time homebuyers or real estate investors, especially those new to real estate investing, will prefer bank foreclosure to any other form of property buying because Real Estate Owned (REO) properties offer the safest, easiest method of acquiring property.
If the property fails to sell at auction, or if the lender ends up as the highest bidder, the home becomes REO, or "real estate owned" by the bank. Lenders then try to sell these REO properties on the open market, often through a real estate agent or third-party marketing company.
In markets where real estate is entering a slowdown, especially in those areas where foreclosure filings ?notices of default are increasing, lenders face downward market pressures. Consider, lenders are not chartered to own and manage (REO) property; in fact, they face scrutiny and pressure from state and federal regulators to dispose of foreclosed properties quickly; therefore, banks will not hold property. They will sell at auction, no matter what the price is. This process takes time, but favors those investors or homebuyers who are diligent and knowledgeable regarding when and in what time to purchase foreclosure property.
6 Reasons to Like Bank Owned (REO) Properties:
No property title issues - once you close, you get clean title policy without exceptions.
No back taxes - banks have paid everything at closing.
House is vacant - I can go there as much as I want before I close.
I do not have to argue about "correct" amount of equity with the homeowner.
You can pick an area - and start buying every good deal in sight.
Dealing directly with the bank, can eliminate the 6 percent sales commission if they act fast - before the bank lists the property with a real estate agent.
Nevertheless, buying bank foreclosure remains the safest method of buying property. The process is easy and many risks associated with other forms of purchase are either eliminated or reduced in the bank foreclosure.
Finding Bank Foreclosure Listings
Generally, lenders are reluctant to share their REO lists with the public, although perseverance and knowledge can help, the best option is to develop a network of contacts. To buy bank foreclosure, scout for announcements or notices in the newspapers or from the courts. You can also contact a real estate agent for such notices or use a listing service.
A number of web sites listing bank REO foreclosure listings offer trial memberships, try a number of foreclosure listings sites and evaluate which offers the best most current listings. Take advantage of the free trial period offered evaluate their listings. The sites should offer the latest listings with daily/monthly updates.
