8 Things You Need To Know About Real Estate Properties
8 Things You Need To Know About Real Estate Properties
A Quick Guide To Real Estate Properties
Real estate owned properties or REOs are sound investments, whether you want to buy your dream house or purchase a property and then sell it afterward to make some profit. It is possible to get REOs at very competitive prices, which means that there's a great chance that you'll earn once you do resell the property. The information below will enlighten you about REOs and such will help you in deciding, whether investing in these kinds of properties is the right decision for you.
1What Are Real Estate Owned Properties?
In case a lender takes possession of a property after the foreclosure sale, he will want to sell the property as soon as possible. This is when you will have a huge chance of getting an excellent deal. These are known as REOs or real estate owned properties.
So, where can you find REOs, and how do you buy them? First, it's essential to understand that REOs are usually properties that do not sell during an auction, which means that the lender who instigated the foreclosure process takes possession of that property. He will then devise a plan so that he can sell the property right away. Most lenders have REO departments, and their main job is to find the best deal as quickly as possible. In case you are planning to buy a property that is undergoing foreclosure, and it turns into an REO, you will likely be able to purchase it at a much-reduced price compared with its total loan balance.
2What Is A Short Sale?
It is still possible to get the chance to finalize a short sale agreement during the day of foreclosure. At this point, it will be difficult to negotiate with the homeowner, and it can be hard to convince the loss mitigation department to accept your short sale offer, but the lender might consider this if he believes that he can make a more significant profit than if the property was auctioned off. In case you're having a hard time convincing the lender, try to discuss your deal with the lender's REO department. REO properties are also included in the portfolio of a lender, and these are the properties whose ownership was transferred to the lender after foreclosure. Indeed, you'll find great deals if you opt for REO properties.
3Are REO Properties Sold "As Is?"
When it comes to REO properties, it's still possible for you to do your inspection before you place an offer; however, you will likely have to purchase it "as is," which means that the bank will not lend you money for repairs. One effective way to get more details regarding REO properties is by contacting lenders who are responsible for mortgage loans, and perhaps you can make inquiries regarding auctions and updated foreclosure listings too. Call and ask if these lenders have an REO department. In general, they will be quite and willing to give you details about properties that are currently on the REO portfolio. Carefully assess these properties before choosing one and making an offer.
4How Do I Buy REO Properties?
After you have successfully negotiated your first deal, you will become a source for others who may need more details. Perhaps, the individual whom you worked with will even give you a call in case there's another property that may interest you. REOs are generally under a lender's or an investor's private ownership, and these are typically sold through a listing broker or an AMC (Asset Management Company). In case the property that you want was seized by private investors during the scheduled auction, you may get in touch with the lender and check if you can discuss your options with someone who handles REO property sales. If need be, approach local brokers and ask them if they know people who manage REO properties.
5Why Build Relationships With Brokers?
If you often invest in REO properties, take care of your professional relationships with REO listing brokers so that they'll give you a call once they hear of properties that you may be interested in. The Department of Veterans Affairs also forecloses properties because of homeowners' failure to keep up with their loan repayments, and the company that handles these properties is Ocwen Loan Servicing, LLC. Before purchasing the property, it's prudent to perform an advance inspection and do the negotiations with the homeowner via a local real estate agent.
6Is A VA Property A Good Buy?
The MLS (Multiple Listing Service) that real estate agents use, as well as local listings, include VA properties. When it comes to REOs, you'll likely get the best terms if you have enough money now. A pre-qualification financing is done before you can even discuss your offer to obtain the deal that you prefer. Some lenders also allow a cure on current loans; this means that loan payments will be taken care of, as well as all past-due fees and foreclosure charges. Also, don't forget to check how many payments (past-due payments) the borrower has missed.
7Are You Financially Able To Buy?
How much cash you currently have, plus the financing that you've prepared, are all relevant when buying a property. For example, you opted to get the same loan that the current owner has defaulted on, which means that you need enough money to settle all the past due fees. In case the lender that you found is quite desperate, and he wants to cut his ties with the property right away, he'll likely take you up on your offer even though he'll receive less than the amount needed to pay off the loan.
Naturally, you want the deal that will be most beneficial for you. Perhaps, at this point, you will need all your money to purchase the property, and then maybe you can make a sizeable profit once you resell it later on. In case you are planning to pay the current mortgage, the lender will likely ask you to submit documents regarding your current salary and other earnings to prove that you are financially capable of making the payments.
8What Else Do I Need To Know About REO?
A lender will prefer not to go through another foreclosure again. Thus, he will likely offer you a pretty good deal if he thinks that you are a reliable individual, who can make a nonperforming (REO) property into something, that makes money again. Once you have bought and sold several foreclosure properties, you will develop a good working relationship with lenders. They will also know you and acknowledge your expertise in the field, which means that you'll readily get financing approval, as well.
You won't become an REO investment expert overnight. Everyone starts somewhere, even those successful real estate experts that you see today. So, don't be scared or intimidated because you are a first-timer. Instead, get help from an experienced real estate professional so that you won't have any problems closing your first deal. Afterward, you can try to do things on your own.