Real Estate Foreclosures - Can You Find a Good Deal on a REO?

When you're looking to buy a foreclosed home, you might be wondering whether it is possible to find a good deal on a REO. These homes are for sale by banks, but they may not be listed by the bank. In such cases, you may have to make a few repairs before making an offer. You should also do a thorough inspection of the home before purchasing it. Bank-owned homes are usually sold "as is" without any warranties or inspections. In addition, some may have been vacant for weeks or even months. The previous owners may have neglected the home, or even completed non-permitted repairs.

Foreclosures are similar to home sales, except that the bank will have to sell them at an auction. This auction will often sell the home for a price below market value. The bank will handle eviction and repairs, negotiate with the IRS to remove tax liens, and even pay off homeowner's association dues. Some foreclosures sell for near-market value, but most bidders don't want to pay this price.

Bank-owned homes are a great opportunity for those who are willing to make some repairs before making an offer. REO homes are often much cheaper than typical foreclosed properties, but they may require more renovations or require a different type of negotiation than other properties. For this reason, REO properties can represent a tremendous discount - as much as 80% off-market value! However, to take advantage of REO properties, you need to be willing to navigate the nuances of the post-foreclosure market.

Before buying an REO property, you should always have a mortgage pre-approval and find a real estate agent with experience in dealing with bank-owned properties. While most lenders price foreclosed homes at their market value, you should know that your offer may have to go through several people at the bank to be approved. You may also have to pay for a home appraisal to prove that the home is worth its value.

Aside from being a great bargain, real estate foreclosures can be a great way to find a home that meets your criteria. If you're prepared to make some repairs and inspect the property yourself, you'll be able to make the purchase at a lower price. However, be aware that foreclosed homes can be incredibly expensive if word gets out that they are for sale. This can make a bargain that you thought you'd be able to get at a reasonable price can end up being a costly mistake.

A bank's motivation to sell REO homes is understandable. The bank is losing money every day that the home remains empty. It's not worth the bank's money to sit on it. A good way to avoid this risk is to consider buying a real estate foreclosure for less than it's worth. But remember that the price will not necessarily be the lowest, and a lower bid may be the best deal.