Buying bank owned homes, or REO’s, can be a source of serious wealth generation. There are more than one real estate investor out there that have changed their lives this way. The result of this is that bank owned homes are commonly perceived as being a good deal.
This perception is sometimes taken advantage of by bankers and lenders. But often it is not actually accurate. Just because a lender is stuck with a property does not mean that they will happily take the loss. They will do everything possible to recoup their failed investment.
Most lenders and their real estate agents boldly label their properties “bank owned properties.” This is because they are hoping that buyers will jump at the chance to buy the properties. It often works out for them. However, properties that are owned by lenders can still be sold at market value or with extra fees. Just seeing that a home is bank owned does not make it a deal.
Even if you buy these properties at an auction, you may still not be getting a deal. Properties are frequently auctioned off for what is owed, but there may be additional fees. You might have to deal with accrued interest, attorney’s fees and fees due to the foreclosure. By the time you pay all this you might not have a deal at all.
You have to do your homework to get a good deal on a bank owned home. You should watch out for properties that did not sell at auction. You should also look out for properties that have been on the market for a long time. These properties are more likely to be draining the lender’s resources. You will have better luck with these properties than those that might still turn a profit.
With REO investing, you have the potential to make a mint if you know what you are doing. Never hurry or act impulsively. Use analysis to insure that a bank owned home is a good investment for you.