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

If you're brand-new to realty investing and thinking about 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 deals once you find them).

Though making an REO deal on a residential or commercial property does require persistence - and more than a couple of hoops to leap through - learning how to buy a bank-owned residential or commercial property can be a profitable part of your real estate investing portfolio (and can help you find undervalued residential or commercial properties, without the marketing expense needed when purchasing a residential or commercial property from a house owner). For what it deserves, bulk REO residential or commercial properties can be among the best exit methods for financiers that know what they are doing.

What Is An REO Residential or commercial property

An REO residential or commercial property, or real estate owned residential or commercial property, is a bank-owned home that failed to cost auction after the owner defaulted on its mortgage. The procedure of becoming an REO residential or commercial property transpires by doing this:

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

- The lending institution starts the foreclosure process

- The loan provider submits a notification of default

- The borrower continues to stop working to make payments

- The lender problems a notification of sale

- The borrower fails to produce the loan provider requires

- The residential or commercial property is put up for public auction

- The home fails to offer at auction

- The loan provider seizes the residential or commercial property

- The lending institution sells the house to generally to home buyers or investors

Where To Find REO Deals

Understanding how to purchase bank-owned residential or commercial properties is something, however if you are going to devote, you need to understand where to discover the deals. Here are three methods to respond to the "where to discover REO offers" concern and put you in a fantastic position to acquire an REO residential or commercial property.

1. Let Your Fingers Do The Walking

The easiest and most standard approach for finding REO residential or commercial properties is to just search one of the lots of public-access sources of REO listings. This consists of:

- Public Records: At any time a home goes to foreclosure a notification must be recorded with the County Clerk. As the name recommends, these records are public and readily available for anybody to view. You'll wish to search for a Notice of Default (NOD) or Notice of Sale. Most importantly, this type of search is totally free.

- Bank REO Listings: Most lending institutions compile lists of all their offered REO residential or commercial properties. The Bank REO Real Estate blog site has a resource where they've gathered much of the bigger ones. Though the search is totally free, the process is lengthy, as there are several listings to go through.

- Government Foreclosures: Banks and loan providers aren't the only organizations who can foreclose on a residential or commercial property. The government - and more particularly federal government companies such as Fannie Mae, U.S. Dept. of Housing (HUD), and the Small Business Administration - can take possession of a residential or commercial property. And each of them has listings of foreclosure residential or commercial property that you can place 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 area - is not a long-term free option. But the initial expenditure is little when compared to the long-term earnings capacity these foreclosure residential or commercial properties can bring.

The upside to these types of research-based sources is that the majority of them free, or when it comes to RealtyTrac, rather inexpensive. The drawback is that they take valuable time and energy. They are offered to any other investor searching for an REO residential or commercial property (making it hard to get a get on the competitors).

2. Leverage Your Network

What's the best way to discover an REO residential or commercial property before it hits the public lists? Leverage your financier network, of course. (A key benefit when finding out how to buy an REO residential or commercial property.)

This would include, but not be restricted to:

- Listing representatives

- Asset supervisors

- Title agents

- Mortgage brokers

- Contractors

and property managers can be the most practical, as they typically have a pulse on residential or commercial properties in the early REO process. This does, however, need that you currently have an existing realty network or are currently constructing one