By [http://ezinearticles.com/?expert=Karim_El_Sheikh]Karim El Sheikh
At first glance, it may be easier to go through short sales and auctions to find that foreclosed home you want. In many cases, it is, especially if you have been in the game long enough. Anyone who prefers to take low-risk investments may want to explore the option of buying bank-owned homes.
Bank-owned properties are almost always properties that for one reason or another, failed to sell at auction. This means that the bank was the highest bidder and it reverts to the bank. This means that the bank is in charge of upkeep and other maintenance, making it a huge liability and an additional financial burden.
By going online or directly to the bank, you can find a listing of any REO properties currently up for sale. Contacting the loss mitigation department usually does the trick, since it often has the listings.
Buying bank-owned property can be a little tedious, since tons of paperwork may be required by the lender before you even get to put in a bid. There is a hidden advantage in this that allows you to negotiate prices and even fees or closing costs. You can negotiate for big discounts, especially if the property has been difficult to turn over or has not moved in years. A smart investor knows how to turn this to his favor.
In many cases the bank is very eager to get rid of the property and can offer you prices well below market value, as well as some interesting low financing offers if you happen to need a little to finance the home or its repairs. The bank here is in a position where it wants to get rid of liability. The amount of foreclosures in previous years means that many banks have a huge listing of homes, increasing their liability and loss.
You also do not have to publicly compete for the property. Auction bids can drive up your price, especially if you come up against someone who wants the property as much as you do. Many investors contact the lender with a specific property in mind. The bigger the listings, the less competition you have to face.
Another advantage is that many of the hidden costs you may have to face when buying foreclosed homes in another way are already solved. Many REO homes are lien, judgment or tax-free, since the bank has already taken possession of property. This means you do not have to pay additional fees on the home, the way you might do for other forms of sales.
The final advantage to buying REO is this: You never need to evict or deal with the previous owner. There will be no emotional scenes because the bank has already gone through the eviction process. All you have to do is buy and move in.
Just a warning: Many repossessed homes come "as is." This means that the bank can sell them even if they are in dire need of repair or in bad condition. Before settling, make sure your contract includes an inspection and conditions that hold the bank liable for repairs or inconsistencies. Many banks provide a document with inspection results, but these can be dated as far back as five years.
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Article Source: [http://EzineArticles.com/?The-Advantages-of-Buying-Bank-Owned-or-Going-for-REO-Properties&id=6828238] The Advantages of Buying Bank Owned or Going for REO Properties