Positive cashflow reo houses are abundantly available in the Southern California Real Estate market, in particular the Palmdale Lancaster area has great deals for investors.
Foreclosure sales begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney's fees and any costs association with the foreclosure process.
Real estate owned or REO is a class of property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction.
A number of positive cash flow REO rentals in the Southern California market can create a passive monthly income suitable for ones retirement.
Real estate investors are already beginning to abandon their fears and pursue the abundance of wholesale REO's available creating a mini bidding frenzy in some Southern California communities.
A large number of novice investors are making offers on REO properties without understanding their true market value.
Putting and or assignee on a REO purchase contract shows a weak buyer and makes the bank think the buyer isn't sure where their funds are coming from.
Because they are vacant, many REO homes get vandalized and sustain damage.
REOs with swimming pools typically have empty or half empty pools that will require repair to the plaster, tile, electrical and pump equipment. This along with a smaller buyer group, increased liability in a hold situation and higher insurance will keep many investors from bidding on pool homes
Many REO properties with low price tags contain surprises in repair costs that can wipe out profit margins.It is important to have a professional opinion of cost for these repairs to ensure a safe purchase.
When buying a Fannie Mae owned REO, you should know the condition of the property, the cost of any needed repairs, and the steps in the loan qualification and closing process before you enter into a purchase and sales agreement.
If you are looking to purchase an REO and are unsure what your credit report is like, you may want to begin by getting a free credit report that you can view immediately online.
REO listing agents make money by either selling a lot of REOs or operating as a dual agent. Under dual agency, the REO listing agent will earn both the listing commission and the buyer's agent's commission.
Buyers with all cash are REO lenders' favorite purchasers. A list-price all-cash offer will beat out a conventional offer, even if the conventional offer is above list price. If the listing's conditions state "cash buyers only," it is unlikely the bank will consider an offer from any buyer who is relying on financing.
There is lots of good REO home available for sale. But buying a bank-owned home in foreclosure is not so easy as it involves risk, hence before you decide on buying a REO Home be sure to do some in-depth research.
Nearly two million foreclosure filings were recorded during the first half of the year 2009, according to the market research company RealtyTrac which will create a glut of REOs for years to come.
It is important to consider quality when buying an REO in this market. A quality home in a quality area in good condition will produce a higher quality renter and improve vacancy rates, cash flow and appreciation over time. This may be more costly initially and take more work to find but will pay dividends at the end of the cycle.
REO tip..to help project the health of an area, pull the NOD and foreclosure data within a 1 or 2 mile radius. This should help you determine what the area will look like over a to 12 month period. Areas with a high level of foreclosure activity will have a longer road to recovery.
Buying a bank-owned or REO property may take an equal amount of time and angst, but the property will be vacant and easier to inspect. In fact, some banks will put a little money into prepping the home for a better sale for them: paint, handyman work, landscaping, etc. Homes are sold without guarantee because the bank has never lived in the home and is selling as-is.
REOs are a safer method of buying a home than foreclosures and short sales, but you might be paying more than you bargained for and be faced with repairs and replacements. To avoid paying more than you intended, carefully research the area and home prices, as well as possible repair costs to find out if a REO home is right for you.
