What are REO residential or commercial properties? Finding REO residential or commercial properties How to buy REO residential or commercial properties

If you're brand-new to real estate investing and thinking of tossing your hat into the "REO residential or commercial property" ring, there may be questioning how to discover REO homes (and how to close those offers once you discover them).

Though making an REO deal on a residential or commercial property does need perseverance - and more than a few hoops to jump through - discovering how to purchase a bank-owned residential or commercial property can be a financially rewarding part of your property investing portfolio (and can help you discover underestimated residential or commercial properties, without the marketing cost needed when purchasing a residential or commercial property from a property owner). For what it's worth, bulk REO residential or commercial properties can be one of the best exit strategies for financiers that understand what they are doing.

What Is An REO Residential or commercial property

An REO residential or commercial property, or realty owned residential or commercial property, is a bank-owned home that stopped working to offer at auction after the owner defaulted on its mortgage. The procedure of ending up being an REO residential or commercial property transpires by doing this:

- The property owner (debtor) stops working to make the mortgage payments on the residential or commercial property

- The loan provider begins the foreclosure procedure

- The lending institution submits a notice of default

- The borrower continues to fail to make payments

- The lending institution concerns a notification of sale

- The customer stops working to produce the lender requires

- The residential or commercial property is installed for public auction

- The house fails to sell at auction

- The lender acquires the residential or commercial property

- The lender offers your house to traditionally to home purchasers or financiers

Where To Find REO Deals

Understanding how to purchase bank-owned residential or commercial properties is one thing, however if you are going to dedicate, you need to understand where to discover the offers. Here are three ways to address the "where to find REO offers" concern and put you in an excellent position to acquire an REO residential or commercial property.

1. Let Your Fingers Do The Walking

The most convenient and most standard technique for finding REO residential or commercial properties is to merely search one of the lots of public-access sources of REO listings. This includes:

- Public Records: At any time a home goes to foreclosure a notice must be tape-recorded with the County Clerk. As the name suggests, these records are public and offered for anyone to see. You'll want to search for a Notification of Default (NOD) or Notice of Sale. Best of all, this type of search is totally free.

- Bank REO Listings: Most lenders put together lists of all their readily available REO residential or commercial properties. The Bank REO Real Estate blog has a resource where they've gathered a lot of the bigger ones. Though the search is totally free, the procedure is time-consuming, as there are various listings to go through.

- Government Foreclosures: Banks and lending institutions aren't the only institutions who can foreclose on a residential or commercial property. The federal government - and more specifically government organizations such as Fannie Mae, U.S. Dept. of Housing (HUD), and the Small Business Administration - can take ownership of a residential or commercial property. And each of them has listings of foreclosure residential or commercial property that you can put on your wishlist.

- Pre-Foreclosure Listing Service: Unlike the sources pointed out above, utilizing a service such as RealtyTrac - which aggregates foreclosure and pre-foreclosure residential or commercial properties in one location - is not a long-lasting free option. But the initial expenditure is little bit when compared to the long-term profit potential these foreclosure residential or commercial properties can bring.

The benefit to these types of research-based sources is that the majority of them complimentary, or when it comes to RealtyTrac, quite economical. The downside is that they take important time and energy. They are offered to any other financier browsing for an REO residential or commercial property (making it hard to get a jump on the competition).

2. Leverage Your Network

What's the best method to learn about an REO residential or commercial property before it hits the general public lists? Leverage your financier network, naturally. (A crucial advantage when learning how to buy an REO residential or commercial property.)

This would include, but not be limited to:

- Listing representatives

- Asset managers

- Title representatives

- Mortgage brokers

- Contractors

Listing representatives and asset supervisors can be the most practical, as they generally have a pulse on residential or commercial properties in the early REO process. This does, however, require that you already have an existing realty network or are presently constructing one