How to Buy
Spokane REO Properties
A bank-owned property (REO) occurs when a lender takes ownership of a property through the foreclosure process or by a deed in lieu of foreclosure. (A deed in lieu of foreclosure is the voluntary return of property to the lender to avoid a foreclosure.) Lenders typically want to sell the asset to recover their
investment – they are in the business of lending money not accumulating properties.
Understanding the REO Property Buying Process
Savvy buyers occasionally find large discounts below normal market prices among short sales, pre-foreclosures and bank-owned properties. These opportunities for bargain hunters are likely to increase with rising foreclosure rates. All across the nation an startling number of homeowners are entering the foreclosure process and many are losing their homes. As the inventory of bank-owned properties grows, lenders will be more open to negotiate price and
other terms. Many prospective homebuyers and investors are looking to cash in on rising tide of Spokane
Trapped in the instability of the sub-prime mortgage meltdown, a growing number of banks nationwide are scrambling to dispose of their rising inventories of foreclosed homes. Savvy homebuyers and investors specialize in the bank-owned
properties are having a field day. While fantastic bargains can found, REO properties aren't selling significantly below market value as of yet. This could change as even more foreclosed properties come on the market overwhelming the normal supply and demand balance with an over supply of motivated (price
discounting) sellers. Search Spokane real
estate for sale.
However, bank-owned property sales can be more complicated because the sale and terms must be approved by the lender or the lender's attorneys. Large banks and other lenders often have internal management objectives that defy an outsider's grasp of common sense. It often seems as though the decision making
process is completely irrational and counterproductive. Also, it can be difficult purchasing bank-owned properties because some lenders have their loss-mitigation department across the country oblivious to local market conditions. With layoffs occurring within in the financial sector, banks are even more understaffed than before.
Tips for Potential REO Property Buyers:
- Real estate investing, like any investment strategy, is part of an overall financial plan. Before jumping into buying bank-owned real estate, understand the real estate laws, tax ramifications and other financial issues.
- Consult with a tax or financial adviser who can help you assess your financial situation. Get your financial house in order first — that way, you know how much house you can buy.
- Don't think that foreclosure investing is easy. For every successful real estate investor, there are countless others who have failed. Make sure you spend time studying the market.
- Seek professional help. Hire a real estate agent with foreclosure experience. Look for a mentor who can walk you through your first deal.
- Prepare your financing, line of credit or cash in advance or making your offer
- Carry out your due diligence in research potential property acquisitions. Lenders will have no knowledge of the material condition or history of the property and thus always sell the property "as-is." Conduct a thorough inspection of all of the various systems in the house. It is truly buyer beware
in these cases.
- Thoroughly read and understand the preliminary title report. Make certain there are not any unexpected liens or claims against the property. These can be mechanic's liens by a variety of tradesman, local planning department liens for unpermitted and uninspected remodeling projects or they can be from unpaid
- Obtain professional advice for any aspect of the transaction you do not understand.
- Arm yourself with a large amount of patience to deal with the mind numbing red tape, bureaucracy and delays often associated with purchasing a bank-owned property.