What is a Bank REO?
A "Bank REO" (acronym for 'Real Estate Owned') is a property that went through the foreclosure process and was taken back by one of the lenders. Foreclosures are at all-time highs currently, and the multitudes of these deals will continue for awhile.
Generally, the previous owner left or was removed, any statutory waiting periods have elapsed, and often the bank has cleaned out the property and secured it.
What is unique about buying Bank REO Properties?
The biggest difference that you need to understand is that you're buying from a bank (though you'll rarely have contact with them... you'll be working with their agent).
A bank is different from a typical seller for a number of reasons:
1. They aren't as highly motivated as many people think.
2. They don't move quickly.
3. They have their own rules they play by.
4. They want you to follow their process and use their paperwork.
Are Bank REO Properties the same as Foreclosures?
No. Although they have been through the foreclosure process, the term "Foreclosures" is usually used with properties in the foreclosure process, when the homeowner still has the house, and through any redemption period (after the Sheriff's sale, when the homeowner can pay off the bank to get the house back or sell it).
How can I profit from a Bank REO?
There are many ways to profit from buying a Bank REO. Here are a few:
1. You can buy a house to live in personally at a deep discount. These houses sell for less than comparable houses because they usually are in need of repair and/or deep cleaning. People tend to not take care of houses they're losing, and often will be malicious and destructive (like taking fixtures or vandalizing the house).
2. You can buy cheap rental properties that can provide monthly cash flow. These houses can usually get a good cleaning and a little fixing up, and be ready to rent.
3. You can buy houses, fix them up, and then resell them for a profit.
Where can I learn more about buying a Bank REO?
There are plenty of good books on the topic, but the information changes rapidly, so the internet is a good source of current information. Check out http://briandickersonflips.com for great front-line information on Bank REO Properties and other investment real estate.
You can also talk to your Realtor. Don't have one? You should. You'll find the REO agents won't want to deal with you OR represent you, so find a good agent with good rapport with the REO agents.
