Here’s An Opinion On:
By Mark Walters
There’s a slice of the foreclosure market that is overlooked by most investors and that is the profits in trashed bank owned real estate.
Bank Owned Home is REO
An REO (Real Estate Owned) is a home that becomes the property of a lender after an unsuccessful foreclosure auction. The truth is that many foreclosure auctions don’t produce bids. Why not?
Well, if there was enough equity in the property to satisfy the loan, the owner could have probably sold the property and paid off the mortgage loan. That home becomes an REO – bank owned real estate.
It is a sad fact that most bank owned properties need at least some repair work done and sometimes the needed repairs are major. When an owner realizes that they are going to lose their home through a bank foreclosure they lose all incentive to maintain the property.
In fact, some people look on this situation as permission to trash the property.
A few bitter homeowners go even further and begin stripping the home of anything that has resale value. They pull out toilet and sinks. They sometimes remove water heaters and fencing. In a few cases you can find repo houses where doors and electrical fixtures are missing.
Foreclosure Stripping
All across the U.S. lenders have a surplus of bank owned real estate. There are far more REO homes for sale than qualified buyers. That means that thousands of bank owned homes are sitting vacant.
Lenders can’t keep a close eye on all this property, so landscaping grows out of control. An overgrown yard is an easy signal to foreclosure strippers.
They will enter the house at night and pull out anything that has not been removed by the former home owner. These vandals will tear out walls and ceilings in a search for copper wire and pipe to sell.
Teenagers find these vacant bank owned properties and turn them into party pads. They become police problems and city officials begin putting pressure on bank management to do something about the situation.
Now, put yourself in the bank’s position. Those homes are trouble and the lender wants to get rid of them as soon as possible.
Bank Repos at Your Price
For the investor that understands rehabbing, bank owned real estate can be the road to riches. It’s easy to convince a bank they should accept your low offer when you can show them photos of a trashed house.
The challenge for investors is contacting someone in the bank who can accept your offer. There are now so many foreclosures that every bank’s loss mitigation department is buried in work. Getting to the right person can be all but impossible.
Do it the easy way. Most banks don’t want to handle the sale of REO property themselves. They usually turn the listing of bank owned properties over to local real estate brokers. The homes will appear on the multiple listing service and reach more buyers.
One or two agents in the broker’s office will be handling those listing. Call brokers in your area and find the names of those agents. Let them know you are interested in trashed bank owned property. You will quickly become very popular.
Yes, there are other ways to find bank owned homes and townhouses. Check out Craigslist.org. You will find that the agents handling the sale of REOs sometimes run ads there.
Some banks turn the headaches of REO management over to national real estate marketing companies like Firstpreston .com. You can find REO home listings on their web site.
Many banks have web sites devoted to offering their bank owned homes for sale. For example, visit bankofamerica.reo.com/search/.
If you are willing to make offers on trashed property, banks are willing to make very interesting deals. Often those deals will include financing.
I think you will find that this is a great way to turn trash into cash!
About the Author: Mark Walters is a third generation real estate investor. For a limited time Mark is offering his big guide to finding private and hard money loans for real estate investing at zero cost.
Free guide to private money loans.
Source:
isnare.com
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