Buying Bank Foreclosure Tips

By: Frank Collins
Due to aggressive lending standards from banks and mortgage companies from the year 2000 up until 2006, discounted properties, up to 50 percent off, are increasingly becoming the product of choice for savvy investors. Where can you find these?

The majority of banks sell their REOs through local real estate agents trying to get the highest amount while at the same time representing any prospects to close it off the bank or lender's books. Check with your agent for the hot list of properties and let him or her know what you are searching for.

At foreclosure auctions and sheriff sales, the lenders and banks must take unsold properties back. This becomes a bank REO. You can contact these banks by phone, mail, email or fax and let them know you are interested in buying some REOs. You really need to be a serious buyer with proven credentials as the banks are not in the business of holding properties so putting in time in an area they are unfamiliar with does not serve them well. You need to present your case well or go through a real estate attorney. The positive results you should see are after your initial transactions with them, you should be able to call them directly without any hassles.

You have to convey what they want to hear. Tell them you're an all cash buyer, and you've witnessed homes transferring back at the foreclosure auction. I ask if they want to work something out with me. If they determine that are someone who can close quickly and pay, a bank REO department person will contact you.

Banks and lenders will price their REOs as high as they can. They do so to cover the expenses and fees for interest penalties, foreclosure fees, attorney fees, other legal and miscellaneous fees. The final tally in fees is usually around $20,000 to $30,000 on top of what the loan balance is. Although, if the existing loan balance exceeds the market value, the bank's fees will be eaten up. The longer it is listed on the market the better chance it will decrease in price for potential buyers and investors. Furthermore, the banks get audited sometime annually and there is nothing worse than having a glut of bank REOs on their books. As that time approaches, they will try to aggressively unload them.


Have a Strategy when buying a Bank REO
For example, if you find an REO and then do enough research you will find homes a block or less away asking $80K. Yet the REO you have your eyes on, the bank wants just $55K but it needs some cosmetic and interior work.
Have some workers with you. Figure out how much it will cost to bring it to your standards or acceptable to locals and you may just get a property at half price

As an investor, don't be too motivated to buy; stay calm and cool; keep your plan that fits your objective and budget; and do your homework, well, research. If you implement it correctly, you should find a few good deals or more.
About The Author:
Frank Collins is an avid investor in real estate and contributor to Income Property Bank REOs and a website to Find Low Mortgage Rates and trusted lenders in your area.