Since the real estate market has taken a major dive, one prominent way to purchase homes has been bank owned homes.
If you are not familiar with bank owned homes, you need to get familiar fast!
If you are a homeowner who will be residing in the property as a owner occupant, these deals are sweet.
If you are a real estate investor, these deals are sweeter than honey!
To make bank owned properties work for you, the first thing you need to do is set up a strategy that affords you the ability to make cash offers and close the deals within the shortest amount of time possible.
What is a bank owned home? This is a property that has been repossessed or as the process is called, foreclosed upon by the bank or lender due to non-payment of the mortgage.
Once a property is foreclosed upon, typically it is offered for sale to the highest bidder at a courthouse type auction.
If the property has no takers, it reverts back to the lender. At that point it is classified as a bank owned home or better known as a REO.
As far as these properties are concerned, there are so many of them on the market that banks cannot afford to simply wait until the market recovers.
Have you been paying attention the high rate of banks being forced to shutdown by the FDIC? These banks, for the most part are being shut down due to bad real estate loans. They have got too many foreclosed properties on the books and they are no longer solvent. Knowing this, as an investor, you’ve got an advantage.
When dealing with bank owned properties, you are now dealing with number crunchers. These are people who have absolutely no emotional attachment to the property whatsoever. Why is this point so important?
Because when emotions run high, so does the price of the properties. The individuals charged with managing bank owned homes have one mission, if they are smart. And that is to move all REO properties off their books as quickly as possible.
As long as banks and lenders keep bank owned homes on their books, you need to understand the reality of the numbers. The bank has to pay insurance on these properties. The bank has to maintain these properties.
Meaning lawn care, trash removal and deal with squatters and vandalism. The bank is responsible for the taxes. As you can see, the costs add up and the more properties they have, the costlier it gets. Too many properties and they will have major solvency issues.
The last thing any bank owner wants is FDIC Examiners combing over their books when they have a plethora of bad real estate loans outstanding. And finally, contrary to popular belief, banks are not real estate companies. Banks are not in the rehabbing business. Banks are not in the renting or leasing business.
The number crunchers in the REO department understand these critical variables. They know what is at stake and that’s why they look to get bank owned homes back into the hands of owner occupants and real estate investors.
As it stands right now, there are tons of bank owned homes available. Most locales have so much inventory on the books they are using every resource available to move these properties.
It used to be that one had to have access to a real estate agent who worked on behalf of the bank to move these properties. When the market was booming, you were lucky if one of these real estate agents took your call, let alone returned it. Now, the tide has turned and it many cases, no reasonable offers are being refused.
Remember this, time is of the essence! Eventually the market is going to rebound and things are going to go back to normal. In the mean time, bank owned homes are hot and you need to jump on this train while it’s still on the tracks!
Joel Marks is a real estate investor who invests in Cheap Houses For Sale, Foreclosure Homes, REO Properties and markets properties by selling Lease To Own Homes and Owner Financing properties. He specializes in helping Americans avoid foreclosure. If you are in foreclosure or facing foreclosure, help is available.
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