By Dick Thackston CRB, ABRM, ABR
Everybody’s talking about “all the foreclosures” on the market; we even see infomercials that talk about buying government and bank owned homes for as little as $500 so you find yourself thinking “Hey that could be cool! How do I get in on that action, I’ve got $500?”
First let me say: “Wake up Dorothy you’re not in OZ.”
I’ve sold real estate since 1982, I’ve been licensed in multiple states for years and I have yet to see a house sell for $500. You are not the one in 300 Million that gets a house for free.
Now that we’ve covered that let’s get to work on what really happens. To get involved in the REO Business, (Bank/Lender owned homes), you need a number of things: a strong stomach; high risk tolerance; spare cash; a good loan officer; a good lawyer and an excellent REALTOR. The first three you have to bring to the transaction yourself. An excellent REALTOR will know a good loan officer and a good lawyer that can help you get your deal done they way you want.
There is no single source of information on REO properties. Lenders all have different business models for disposing of these assets however 99% wind-up in the MLS. Some agents/agencies deal in larger numbers of these than others but almost all agencies deal in some.
The most successful way to begin the process is to find an Excellent REALTOR you know understands the process. Going from agent to agent and office to office is likely to produce poor results for you, not to say you shouldn’t switch agents if you feel whoever your dealing with isn’t into REO’s – some agents and agencies aren’t – but keep in mind most agents who ARE into REO’s have a regular list of customers and clients that they can and do make aware of excellent opportunities when they come on the market whether they are that agent’s or someone else’s listing. Excellent REALTORS tend to be loyal to their good customers and try and make sure that they keep an eye open for opportunities.
Trying to buy REO properties as a first-time home buyer with no money down and no real experience in ownership can and often does work but you will need to listen carefully to what your Excellent REALTOR tells you about the pitfalls of such a transaction and what information your loan officer will need to get the transaction to closing. There are undeniably excellent loan programs out there to make such dreams a reality but you need to make sure you’ve reviewed what your long and short term goals and abilities are with your Excellent REALTOR so you are all on the same page.
Buying REO’s is all about reality and all about having focused goals – remember you don’t want to be included in the next wave of foreclosures.