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Guide on Buying Foreclosure Properties

Guide on Buying Foreclosure Properties

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Published by Shakeel Memon

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Published by: Shakeel Memon on Oct 11, 2009
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02/12/2012

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Perhaps the easiest way to buy foreclosure property is to buy REOs ("real estate owned").
An REO occurs when the mortgage lender takes back the home to gain possession and
cut its losses. The lender, however, does not want the home because it is not in the real
estate business and is therefore usually motivated to move the property quickly.

Pros of buying an REO: The lender is almost always the senior lien holder, thereby
wiping out all other liens at the auction. This means an REO will always have clear title,
which saves a lot of time, expense and worry when buying a foreclosure home. Most
likely, the mortgage lender will also have paid any property taxes in arrears. The lender
may either repair the property to acceptable standards or allow a discount to the buyer to
accomplish the repairs.

Cons of buying an REO: Rewards follow risk: this is a low risk investing method and the
rewards can be on the low side as well. Average savings may range from only 5% to 15%
off market value, although discounts of 25% or more are possible if you know how.

Buying Foreclosures; by Sani Panhwar

31

Investing in foreclosure homes can provide excellent profits. Each of the three
foreclosure opportunities presented here offer both rewards and certain risks. Be sure to
do your homework before you buy.

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