REO FACTS

REOs, or Real Estate Owned by banks, are either seen as a wise investment for most real estate investors or a risky investment for some. These buyers are aware that REOs are good investments since they are getting the lowest deals on foreclosed homes but they are too cautious to get involved with all the legal and financial aspects of these properties owned by banks.
Then there is the misconception that foreclosed properties end up to be more costly even if they have a lower selling price than other homes out in the market since they would have to be repaired, refurnished, repainted, etc. Just because it is an REO, it doesn’t necessarily follow that it is a neglected or badly damaged one. Most foreclosed properties are with the banks because the previous homeowner could not afford the mortgage anymore.
One good thing about REOs is they are sold at 20-30% below the average market value. This is because the aim of banks is to at least recover their money by disposing of these assets as quickly as they can, much like a department store clearance sale.
Just as you would in a typical Real Estate market, an investor should shop around and compare REO values of different banks prior to making a purchase. Include the cost of repairs in your comparisons to see if the property is indeed a bargain or more of an expense.
REOs can be good investments if one knows how to shop around and compare prices of either similar foreclosed homes or similar homes in the market. It is a good way to earn more profits as a real estate investor and many have become rich just selling REOs.