The Pre-Foreclosure Property Investor's Kit: How to Make Money Buying Distressed Real Estate -- Before the Public Auction
Chosen as one of Robert J. Bruss' 10 best real estate books of 2005! "This ultra-complete book reveals virtually everything necessary to profitably acquire foreclosure distress properties without making costly mistakes."-Robert J. Bruss, nationally syndicated real estate columnist
Pre-foreclosure real estate is one of the hottest investment opportunities on the market. The Pre-Foreclosure Property Investors Kit offers step-by-step instruction and no-nonsense advice on how to find great deals, estimate fair market value, negotiate with sellers, sell your property on your own, and win big in real estate. Youll learn how to get the best deals on foreclosure properties before they go to auction and utilize simple ready-made worksheets, checklists, forms, and agreements that make getting started easy. Even people of modest means can get into pre-foreclosure investing—all it takes is a little hard work, persistence, and the tools youll find in this handy guide.
Biography
THOMAS J. LUCIER has been a real estate investor since 1980. An active member of both the National Association of Real Estate Editors and the Real Estate Educators Association, he is a widely published real estate expert whose advice has appeared in such publications as the Wall Street Journal and Commercial Investment Real Estate magazine
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Real estate owned or REO is a class of property owned by a
lender, typically a
bank, after an unsuccessful sale at a
foreclosure auction. A bank will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount. If there are no bidders that are interested, then the bank will legally repossess the property. As soon as the bank repossess the property, it is listed on their books as REO - Real Estate Owned - and is categorized as an asset (non-performing).
As soon as a property goes into a distressed status (the borrower/home owner misses mortgage payments) the bank will want to determine the amount of
equity that the property has. A popular method to determine the equity is to obtain a Broker Price Opinion BPO or order an
appraisal. Based on the amount of equity that is determined from the BPO, the bank will decide to try for a
short sale or to allow it to go through the foreclosure process. If the bank is able to sell the property through a short sale or at a foreclosure auction, then the property will not become a REO property.
After repossession and the property becomes classified as REO, the bank will go through the process of trying to sell the property on its own. It will remove some of the liens and other expenses on the home and try to resell it to the public, either through future auctions or direct marketing through a
real estate broker (REALTOR). Generally speaking, bank REO properties are in poor shape in terms of repairs and maintenance; however,
real estateinvestors will often go after these properties as banks are not in the business of owning homes and so, in some cases, the low price can more than compensate for the condition of the property.
Once a property is REO, the bank or lender will try to get rid of the property by either selling it directly themselves or through an established
broker. Many larger banks such as Bank of America and Wells Fargo have REO/asset management departments that will field bids and offers, oversee upkeep and handle sales. The majority of REO properties that are on the open market are listed in
MLS by the broker/REALTOR that performed the BPO.
^ William Roark (2006), Concise Encyclopedia of Real Estate Business Terms ISBN 0-7890-2341-5
As soon as a property goes into a distressed status (the borrower/home owner misses mortgage payments) the bank will want to determine the amount of