Whether you are a first time investor, looking for a great deal on a primary residence, or a seasoned real estate investor…this may help.
First of all...for those of you that don't know a bank owned property, foreclosure, or REO are all pretty much the same thing. (REO-Real Estate Owned) Typically, an owner in arrears on their mortgage payment defaults on their mortgage and goes into foreclosure. The bank takes this property to the county courthouse steps and try’s to auction it off to the highest bidder...that is, as long as the highest bidder bids more than the reserve the bank has set for the property...which typically doesn't happen. Soooo, the property goes back to the bank and now the bank is in the business of selling real estate!! The bank will usually list the property for sale with their preferred real estate agent in town and sit and wait for offers. Every bank is different...some will price low and receive multiple offers to drive the price up to create an auction like atmosphere and some will price too high and come down to a more realistic price eventually. If you are looking to snatch something up in the earlier scenario you HAVE to be ready at a moment’s notice to send in your offer...along with VOF (Verification of Funds) and an offer to purchase...and be prepared to submit your H&B (highest and best) offer!!! In the latter scenario you usually don't have much competition when submitting an offer so you can start low and be prepared to be persistent and go back and forth several times until an acceptable deal is reached. There are LOTS of other things to know and be aware of when you are in the hunt for a great deal!!! I will continue this series of "How to buy bank owned properties" in series 2- coming next week.
-Submitted by Jeremy Wilson, REO and Short Sale Listing Specialist and owner of www.ChuckTownHomes.com