REO Foreclosures & What They Mean To You! Have you considered buying foreclosed homes to make money or maybe get yourself a great deal on a new home at a low price? If you have, you may be surprised to know that it's not as easy as you may think.
Foreclosed properties are often available for sale at a steeply discounted price. That said, buyers need to know that buying and living in a foreclosed property isn’t as easy as it sounds. That is why some buyers instead opt for properties referred to as REOs. These properties are real estate owned.
As previously stated, buying and moving into a foreclosed home isn’t always as easy as it sounds. Some states tend to draw out the process; you need to know that just because you are the winning bidder at a foreclosure auction doesn’t mean you can move in immediately. You may still end up with no home.
Why? Because many states have redemption laws. These laws give delinquent borrowers time to get their mortgages back in good standing.
It's also important to know that many people don't want to leave their homes. While many will do so when faced with a legal eviction notice, you may be surprised how many occupants put up a fight. There are even cases where lawsuits were brought against the new buyers! If you cannot afford the cost of legal representation, foreclosures may not be in your best interest.
Depending on the state in question, buyers of foreclosure properties may be responsible for any outstanding liens or back taxes. Don't let this come as a surprise to you after the fact.
If you're not careful, this can significantly increase the cost of a foreclosure, possibly making it no longer affordable. For personal protection, always consult a professional before buying a foreclosed property, especially at a real estate auction.
Buying foreclosures can be risky; many homeowners opt to purchase real estate-owned (REO) homes or property. The original lenders own these properties.
During this process, the lender is commonly referred to as the investor. Often, the lender in question will buy back the home at a real estate auction. This is usually done when not enough interest is generated in the auction or when the bids are anticipated to be or are low.
Many experts state that buying a REO home is the best way to buy a property that is in trouble. Why? Because at this stage, the home is likely cleared of all occupants. Financial lenders often have the means and the power to evict all occupants, even those who are against leaving.
The only individuals you should have to deal with are the investors, which would be the bank. In rare events, a bank may turn over the sale of the home to a real estate agent. However, since real estate agents take a percentage of each sale, the asking price of an REO home is likely to increase. For the best price, deal with banks directly.
How can you find real estate own properties? Visit all local banks in your area and ask if any real estate owned properties are currently available for sale. If so, request information on those properties.
The online websites of nationally owned and locally operated banks can also be examined. Many times, REO properties are listed for sale online. Remember, the same information can be acquired by scheduling an in-person meeting with the bank’s loan officer or real estate advisor.
A strong warning: Never enter into any agreements without the proper legal knowledge when you are interested in buying a home, whether through a traditional real estate agent sale, an REO, or a foreclosed property. Always hire or consult an attorney specializing in real estate or foreclosures.
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