How are you? My name is Andre Beraud. I was wondering is it a great idea to buy Bank REOs. WHAT ARE THE PROS AND CONNS TO BUYING BANK REOs. Thank you so much for your time ans support. SEE YOU AT THE TOP
Real Estate Owned properties (REO) are properties that have gone through the judicial foreclosure process. They went to auction on the courthouse steps, and for whatever reason failed to sell at auction. They went back to the bank and became classified as an REO property. The bank is still trying to dispose of the property.
There's no real drawback to an REO property. The banks have a few rules that they like to enforce as part of the sale process. There is usually some room to negotiate.
1) Banks prefer to sell to individuals rather than professional investors. They hate the idea of investors profiting from the bank's losses. So they sometimes insist that the buyer be an individual, not a corporation.
2) They also usually insist that the contracts are not assignable. So you cannot wholesale the deal to another investor. Again, they don't want to lose money and see an investor profit from their loss.
3) Banks tend to be intimidating in their negotiations. However, you can negotiate with them just like any other party. I successfully negotiated a $50,000 reduction in price in a multiple offer scenario.
4) Do your math. Make sure that you stick to your numbers. Don't let their negotiation stance influence your discipline on what constitutes a viable project.
There are many pro and cons.
I will shed some of them here.
1. You could a great deal because banks want to get rid of them.
2. REO sellers will NOT fix anything mentioned in the inspections including Mold, termite, lead based paint, etc. You have to buy as is.
3. They usually prefer cash or conventional loans (usually NO fha).
4. They don't like contingencies.
5. They come with their own addendum.
6. Sometimes you could buy directly from the bank and you don't need any real estate broker to assist you.
Hope it helps.
Thanks so much Mr. Victor and Mr. James for your time and support.
You can potentially get property well under market value.
You have to buy it with all the utilities off. No checking to see if any of them work.
If it's in a competitive area you will have to use cash.
It can take days, sometimes a week or more to get a response from them.
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