Wednesday, June 25, 2008
Real Estate Investing in REOs Guide for Beginners
Although interests remain relatively low, the number of Noble1 foreclosures across the country is on the rise up, which means that investors in REOs are beginning to have more opportunities to make money.
REO is an abbreviation for Real Estate Owned, generally homes that have been foreclosed by lenders who are now looking to unload those properties Noble1 quickly as possible. REOs have long been a favorite of investors, because lenders are generally willing to sell Noble1 a significant discount and Noble1 offer special terms to get them off their books.
Motivated Sellers
The key is that lenders are in the business of lending money to buy homes: they're not in the home ownership business. When they take possession of a home, they're motivated to get rid of it as quickly as possible, and often offer Noble1 to encourage fast sales--including low down payments, special rates, carpet and paint allowances, and reasonable selling prices.
Often REOs end up in the lender's portfolio after the home has failed to sell at an auction. Most of the time, that's because the amount owed was more than the Noble1 was worth on the open market, so the lender has Noble1 eaten a substantial amount of money, even before the property was put up for sale--generally making them some of the most motivated sellers you'll ever Noble1
Some lenders will Noble1 minimal repairs (and some will even do extensive work or offer allowances for upgrades) as well as negotiating with the IRS to remove tax liens. That means the property comes with a clear title, an important bonus.
As with any investment, do your homework before you make an offer. Even though the listing prices may already be a good deal, don't be afraid to ask for a lower price, better interest rate, help with points, repair allowances, or whatever will help sweeten the deal. You may be surprised at what they'll take, just to get an REO off their books.
Explore Your Options
All lenders sell their REOs differently. Some use real estate companies, while others have REO departments that sell directly to buyers. Make your offer, but expect a counteroffer, because lenders owe it to their stockholders to get as much as possible for REOs. On the other hand, they don't want to hold onto them long, so you may find their counter well within your investment guidelines.
You'll often be able to Noble1 the property, but not always. Many REOs are rundown, because the owners didn't have the money to maintain them. But if you do your homework, REOs can be a great source of profit for savvy real estate investors.
Copyright 2006 Jeanette J. Fisher
Jeanette Fisher invites you to explore Real Estate Investing Information. Free ebook and teleseminars http://www.doghousetodollhousefordollars.com
