Buying bank owned homes, or REO’s, can be a source of serious wealth generation. More than one real estate investor has changed their life this way. The result – bank owned homes are commonly perceived as being a good deal.
In some cases bankers and lenders take advantage of this perception. However, it is actually seldom accurate. You can never count on a lender taking a loss on any property. They will do everything possible to recoup on a failed investment property.
It is not atypical to see banks and lenders label their properties clearly “bank owned properties.” They hope that this will make buyers jump at the chance to buy the properties. And it often works. However, properties that are owned by lenders can still be sold at market value or with extra fees. Just seeing that a home is bank owned does not make it a deal.
Even if you buy these properties at an auction, you may not be getting a deal. There are often additional fees added on to just what is owed on the property. You could also have to pay accrued interest, attorney’s fees and foreclosure fees. By the time you are done you may not have a deal at all.
You have to have done your homework to get a good deal on a bank owned home. Keep an eye on properties that did not sell at auction. You should also look out for properties that have been on the market for a long time. These properties may be draining the lenders’ resources. You’ll have better luck with this than a property that appears to represent potential profit.
With REO investing, you would have the ability to make a mint if you do it right. Never hurry or act impulsively. Use careful analysis to insure that a bank owned home will be a solid investment for you.
