As foreclosure statistics stagger, 6,600 new foreclosures a day; one every 13 seconds, investors are asking, what is the best way to buy bank owned property or REO’s?
Let’s be logical. You can’t expect to buy a home at 50 percent less than the area comparables, but with research and the right team, a discount of 20 percent is possible. And consider this is a 20% reduction off already discounted comparables.
For starters, pay attention to time on the market. The best opportunities may be properties just freshly listed (expect steep competition) and properties listed for 3 to 6 months or longer. A winning bid for a “long in the tooth” listing is just another way to buy with built in equity. It’s critical to analyze comparable sales data to snag the best deals.
When competing for REO property, lenders offer the steepest discounts to cash buyers. Next in the pecking order are conventional buyers with 20% or more down payment. While 96.5% loan to value FHA buyers and three to six percent seller paid closing cost concessions are common these offers will suffer compared to a conventional or cash as is offer.
Do not rely solely on what you see online. Listing agents want to move quickly and in an effort to list a property online very fast, may leave out some very attractive features of the listing. For example, some listing agents have been known to leave out crucial details of a property like a swimming pool, or a corner lot. Take the time to physically visit the property. A green pool, missing appliances, a leaky roof, mold or termites are common and must be factored in to your best offer.
Consider the school district; some buyers may have over looked that factor because they do not have children; yet statistically homes in A+ school districts have proven to have solid resale value.
The market is flooded with foreclosures but that does not mean financial institutions are willing to “give” homes away. Deploy an experienced real estate power team for the research and strategic advice needed to determine who walks away with the best REO deal.