Bank owned investment properties are some of the most cost-effective investment junctures for real estate investors. Also known as real estate owned properties (REOs), these are investment homes that have gone through the foreclosure course without attracting a purchaser. As an outcome, they end up being own by the bank.
THE LEVELS OF THE REO PROCESS ARE AS FOLLOWS:
- LOAN DEFAULT- This is situated when the borrower (homeowner) defaults on their mortgage fee for a specific period. After this period (usually will last up to 90 days) has expired, a notice of default will be sent out. At times, the householder will be offered an extra 90 days to complete the outstanding fees.
- WILL AUCTION- Also known as the “Trustee’s Sale,” this is the level where the property is put up for a public auction. Usually, the minimum bid is parallel to the outstanding loan amount, along with any payments incurred and accrued interest. Once that the real estate auction is settled and the winning bid is already confirmed, the property document is immediately given to the buyer.
- THE REAL ESTATE OWNED- Any property that does not sell in the auction will immediately become a bank-owned property. The bank will then either sell the home on their own or through a real estate agent it depends on the bank’s decision. This method includes removing the occupants, setting its price, preparing the property for sale, and clearing charges.
PRO TIPS THAT WILL HELP YOU FOR PURCHASING BANK OWNED PROPERTIES HERE AT SACTOWN:
- UNDERSTAND THE ADVANTAGES OF PURCHASING REOs: To fully understand what a bank-owned property has to offer, you should put in mind first the benefits of what are you getting ( or should be getting) from this real estate deal. Take note that REOs are often sold below the market value, with other assets such as low-interest rates and low down fees. Also, buying an REO bank-owned property will involve less clash and less risk and since there is no householder to negotiate with, the agreement period is normally much shorter.
- SEARCH FOR BANK OWNED INVESTMENT PROPERTIES NEAR YOU: Before knowing how to purchase bank-owned properties that are for sale, investors should know how to look for them first. And since this is your first ever bank-owned home investment, it may be great to go after the properties in your local real estate market. You can do some search through bank websites, contacting local lenders directly, look for REO listing agents, or search for your local Multiple Listing Service.
- MAKE AN OFFER HASTILY: Since most of the banks want to get rid of REO properties as soon as possible, the closing process will normally be very quick. Some banks even charge extra fees for late paperwork. Once you have checked the home and done an appraisal, make an offer instantly.
- DON’T DO OVERBIDDING: Remember that when you are making an offer for REO rental home, you should avoid the temptation of bidding further than your budget. Make an acceptable bid and stay calm. If your financial profile is better, the bank might just accept your offer even if you are not the highest claimant.
While it is likely to get a great deal on an REO property, you will need to put in a lot of effort and time. Nevertheless, don’t get discouraged if your offer gets declined. You can always look for other bank-owned properties being sold elsewhere around Sacramento county.