INVESTING IN FORECLOSURES FOR BEGINNERS LEX LEVINRAD
Buying REO properties is not as competitive as pre-foreclosures, but is more competitive than buying at the
courthouse. This changes with the economic cycle too. For example, right now there are many listings on the
Multiple Listing Service (MLS), so bank owned properties on the MLS are the most competitive. The general
public has access to REO properties through websites like www.realtor.com, www.trulia.com and
www.zillow.com. This makes purchasing REO properties fairly competitive, although the barrier to entry is high
since you need to be a cash buyer.
Usually you cannot get a mortgage to buy a bank owned property. There are some exceptions especially with
government entities like Fannie Mae and Freddie Mac. In fact, if a bank is faced with two offers, they will always
take the cash offer even if it is lower than another offer. The reason is because banks need to liquidate REO
properties quickly in order to avoid a bottleneck of owning too many properties. Federal regulations limit how
many bad loans a bank can have on their balance sheet, so banks try to get rid of their REO properties as
quickly as they can.
For this reason, cash buyers that are prepared to close quickly and waive contingencies like inspections will
always get the best deals. One big a Gf?FvR?bW&6?6??r$T?&?W'F?W2?2&V?F?fV?g&VR?B6?V"F?F?R???W6RF?Rv?&B&V?F?fV?6??6RF?R&??2W6RF?V?"?v?F?F?R6????W2F?6??6R??F?V?"$T?&?W'F?W2??6??WF??W2F?W6RF?F?R6????W2F???B6V&6?f?"6?FRV?f?&6V?V?B?BWF??G?&????V?2?F?W????7B?WfW"F??W&?B6V&6?W2???vWfW"F?R?&?WF&??G??bF?RF?F?R?2?WfW"??VW7F????F?R?V?&?G??bW&6?6??r$T?&?W'F?W26??vW2FWV?F??r??F?R7W'&V?B7FFR?bF?R&V?W7FFR?&?WB??&W6V?F????#"?F?R&W7B??'GV??G?f?"'W???rf?&V6??6VB&?W'F?W2?2v?F?&???v?VB&?W'F?W2?7FVB???F?R??2???6??R66W2F?W6R???W2&R&V??r6??BB&?F?7V??W6?6?V&?6W2?6??6RF?W&R?26??V6?GW&???????F?R&??r6V7F?"???&??2&R&V?V7F?F?&V??rf?&6VBF?( ?GV?( ?&?W'F?W2BfW'???r&?6W2???vWfW"??F??2?26??v??r?B&??2&R??&R6???7F?6FVB??r?B&R???F??r??F???fV?F?'??F?B?2v??&?6W2?fP?7F'FVBF?&?6R?Bv???6??F??VRF?F?6???b??R?fRF?R66?F???fW7B??R6??V?B&Vv????????rf?"?$T??&&v??v???RF?W?&R7F???f??&?R??B?2W7F??FVBF?BF?W&R?2V??Vv?7W?7F???V?FW&??rF?R?&?WBF?B??P?6?&?&&?W&6?6R?$T?&?W'G?&V?F?fV?6?V??BV6???fW"F?R?W?B?V"?'WB?F?R???vW"??P?v?BF?R??&R??V?&?6W2v???&?6R?B??Rv????72?WB??F?R??'GV??G??b?fRF??RF?'W?&V?W7FFRf? ?V???W2??F?RF???"?f?"F?V?B???rFW&?&V?W7FFR??fW7F?'2??r?2?W?6V??V?BF??RF?&R'W???r&V?W7FFR?