Why buy REO foreclosure?

To those who may not be familiar, banks come to own real estate properties after acquiring them through foreclosures. The properties thus acquired and reflected in bank's books are called REOs (Real Estate Owned). Please understand that banks receive property deeds of homes by way of foreclosure, when no one comes forward in the courthouse to bid the minimum amount of the mortgage.

Bank will be in a hurry to sell its inventory of REOs in the open market to quickly recover the amount that is due to the bank by the previous mortgagor. Banks will be keen to dispose off the REO and realize the money and will not needlessly hold on to the REOs. The simple reason is banks are not in the business of real estate to make profit and their sole aim is to recover their loan dues.

Because the banks do not mind losing a bit of money on each REO, they are willing to sell it fast and cheap. Though difficult to believe,

some banks sell an REO property for as low as 30 percent of its value just to realize the dues.

Thus, it quite often happens that banks sell REOs at below market prices and if you succeed in buying one such property, you are assured of a windfall profit. All real estate investors know full well that dealing in REOs can be highly profitable. Though every REO may not fetch big returns, but there is no denying that there is a lot of money when dealing with REOs.

As an investor, if you are eager to buy REOs and amass money, you should target REO homes that have been on the market for more than a month as the banks will be willing to agree for below market prices to get rid of them. But if the listing is new to the market, the bank will obviously not be willing to reduce its asking price.

Unless you have prior experience negotiating price and other terms with banks, it is prudent to hire the services of a REO buyer agent who is reliable and has a successful track record working with REOs. But the truth is spotting the right REO agent is an uphill task.

The type of loan with which the property was bought the first time around matters a lot. If you are serious about REO investment, you should purchase REO’s that had a traditional loan the first time around, as you will be able to get much better deals as compared with FHA and VA loans.

It is a known fact that the federal government backs FHA and VA loans. If you invest in homes that had traditional loans the first time are often bought for just a fraction of their value – which means they will fetch you a lot more money.

The major advantage about dealing with an REO is that you can buy the property after inspecting it. Further the untold truth is the bank will only be too eager to accept any serious offer you make because it can immediately tick the house off and realize the money fast.

If you are in a tearing hurry to enlarge your wealth, the magic formula is - buy REOs

Resource:

REO riches formula being introduced by Jeff Adams will bring profit for the investors. Jeff will help you to close your first deal in a week, Multimillion dollar secrets revealed, Know how to grab a foreclosure before it even hits the market and much more. For more useful information visit our site http://www.reorichesformula.com