There are a lot of words that might be unfamiliar to you as you start your career in real estate. There are words you should know and other words that you will come across in time. A trend in modern real estate is something known as an REO property. The REO properties definition is one that must be understood should you want to invest in these properties. The acronym for REO means real estate owned. This term is most often associated with foreclosures or other properties that are owned by banks, mortgage lenders or government agencies. Real estate investors know that REO properties are big business and learning what they are and how you can acquire them is an asset to add to your investment business.
How to Purchase REO Property
Banks and lenders typically have backlogs of properties due the higher than average foreclosure rates in states like Florida. These properties are not made public and only real estate agents or investors with connections can get access to these wholesale properties. A bank or mortgage lender with many properties is usually eager to get rid of them quickly to avoid the heavy duty loss of foreclosure. If you are not working with a turnkey property company, you could make your own connections with a lender or buyer's agent directly.
REO properties are always sold as is and will likely need major renovations and work completed to get them into livable condition again. Investors that have access to private funding or the cash on hand could pay the expenses of the upgrades. Some of the costs include closing fees, appraisals, pest inspection and disinfection and an insurance policy. REO property is usually difficult for a beginning real estate investor to purchase due to lack of available finances and professional connections.
Before a property ends up as an REO, the end of the foreclosure process usually includes a lender auction. The homes that are not sold are taken back by banks and lenders. It costs a lot of money for a bank to possess a foreclosed property and making a deal could be possible if you know whom to call. Some investors begin their career buying and selling REO property and others might find it much easier to handle a turnkey property solution. All of the options must be weighed regardless of what style of investing that you choose. There is only one successful way to learn real estate and this way is the right way.