| If you have a mortgage and failed to repay the | | | | is that most of the REO properties are in bad |
| monthly payment, you are in the risk of getting a | | | | condition and are poorly maintenanced. You might |
| foreclosure. The lender, mainly the banks will file | | | | get a REO property that has a missing door, bad |
| for Notice of Default and there is nothing you can | | | | or missing piping and even with broken windows |
| do once the foreclosure is finalized. However, | | | | as well as other things you might not want to |
| there are many ways you can avoid and stop a | | | | know about. People in distress will take out their |
| foreclosure from happening. You can find out | | | | anger at the house and the bank that lent them |
| more about this online or get a professional point | | | | the money so they could buy the house. These |
| of view in this matter. | | | | are perfect opportunities for someone with time |
| When a foreclosure happens, the lender such as | | | | and some cash to do the repairs. The more |
| the banks will take over the properties involved in | | | | repairs required, generally the larger the discount. |
| the foreclosure and try to sell it off at the | | | | The types of "dirty dogs" are perfect for |
| foreclosure auctions. A foreclosure auction is going | | | | investors or real estate agents that can recognize |
| to take place to auction off the properties to the | | | | the potential. Banks aren't in the fix up business. |
| public. Before the auction take place, you will be | | | | They want to remove the property from their |
| able to see many advertisements whether in the | | | | books and move on. You might want to look at |
| newspapers, billboards and even online banking | | | | these opportunities if they are selling at a low |
| portals. Some of the legal paper are good places | | | | enough price to compensate you for the bad |
| to look. In the Twin Cities area, you would want | | | | condition of the properties. |
| to look at Finance And Commerce as well as the | | | | A Multiple Listing Service (MLS) is a group of |
| St Paul Legal ledger to find properties that may | | | | private databases that contain the listing of |
| become bank owned properties. | | | | properties represented by a real estate broker |
| However, most of the properties have no buyers | | | | who is representing the seller to share information |
| as the price of purchasing the mortgage is much | | | | about the properties with other real estate |
| higher than the market price. Therefore people | | | | brokers who represent the potential buyers. The |
| are not interested in the properties that are more | | | | purpose of the MLS establishment is to allow |
| expensive than the market price for similar | | | | efficient distribution of information. When a real |
| properties. Why would you pay more for the | | | | estate agent is introduced to a potential home |
| same property? Unless of course, the banks are | | | | buyer the agent is able to search the MLS |
| willing to reduce the price, and this is usually what | | | | system and get the information about all the |
| happens. Since marketing a home for more than | | | | homes available for sale in an area. Recently, our |
| it's worth will give the bank no chance of unloading | | | | Northstar MLS in the Twin Cities Minnesota has |
| the property. There is no way the banks can get | | | | created a search field specifically for foreclosed |
| people to buy the properties unless they make | | | | homes. This will allow you pinpoint this type of |
| their property more attractive. In order to solicit | | | | property more easily. |
| an offer, banks often sell at slight discount to true | | | | Why do banks want to get a Realtor to help sell |
| market value-10-20% of a discount on such | | | | off the properties in the banks inventory? If the |
| properties. Investors and the consumers do their | | | | banks have too many properties in the inventory, |
| homework. The internet and the data it provides | | | | it will do the banks no good to hold inventory of |
| is the great equalizer. | | | | homes-especially in a declining valuation market. If |
| Real estate owned or "REO" (also referred to as | | | | the banks get an agent to help sell off the |
| "ORE" for owned real estate) describes one of | | | | properties, at least the chances of getting people |
| the classifications for property owned by a lender. | | | | to buy the properties would be higher, since most |
| Normally the lender is a bank and the property | | | | buyers use a real estate agent. The banks want |
| becomes repossessed by the bank after an | | | | to get rid of the properties not keep them. Banks |
| unsuccessful sale at a foreclosure auction. This is | | | | are in the money lending business, not the real |
| a normal process as most of the properties in the | | | | estate investment business. |
| foreclosure sale are worth less than the amount | | | | Banks want to get back the money supposedly |
| supposedly owed to the bank. | | | | the previous owner owed them but if they can |
| Therefore people are unlikely to buy such | | | | get at least half of it, they might not mind. In |
| properties and the properties end up in the bank's | | | | some cases that is better than waiting six more |
| inventory. The minimum bid for the foreclosure | | | | months and now only recovering a third. As long |
| properties is the same as the total amount of the | | | | as they can get the money and the property off |
| outstanding mortgage amount. As such, most | | | | their listing, the banks would not mind to sell the |
| people are not interested at all at the properties | | | | properties at a lower price compared to the |
| until after the sheriff's sale- no matter how | | | | original pricing of the properties. The banks are |
| enticing or beautiful the property might be. | | | | getting many properties today. Yet, not many |
| People are smart enough to check out the | | | | people are able to buy them because of the tight |
| market value for the similar homes before they | | | | mortgage market. |
| buy it to make sure that they are not on the | | | | When the real estate agents get the properties |
| losing side. However, some people might think | | | | as a listing, they will try their best to find potential |
| that it might be profitable to buy a property that | | | | buyers so they can sell off the properties. Agents |
| has been foreclosured. They might think that if | | | | are often the bearers of the bad news, bringing in |
| they can get the property at the lowest price, | | | | a low priced offer. The main point is to get the |
| they can sell it back at a higher price. While good | | | | properties out of the banks listing inventory, as |
| in concept, it is unlikely to happen until the current | | | | there are so many more properties being filed |
| inventory is absorbed and the market starts to | | | | into foreclosure everyday. More and more people |
| march forward once again. | | | | are having the problems to repay the monthly |
| Recently we are seeing wholesale liquidation | | | | repayment for the mortgages. Eventually, things |
| where numerous properties are disposed of at | | | | will stabilize. But, until then, the buyers have the |
| auction. So what happen when the foreclosure | | | | upper hand. |
| auction fails? The bank will try to sell the property | | | | Now, if you are one of those who want to buy a |
| on its own, meaning the bank will remove some | | | | foreclosure property, it is very important to |
| of the liens and other expenses included before | | | | make sure that you know everything about |
| the property is up for sale in future auctions. The | | | | foreclosure properties, the fees involved when |
| bank might offer the property directly to the | | | | you want to purchase, any hidden cost, additional |
| public through a Realtor. This is possibly the best | | | | cost and the total amount you will be paying in |
| way for the banks to get the properties off their | | | | the end to get the property. Is it worth paying |
| listing as the chances to get buyers would be | | | | such a big cost to get a foreclosure property? It |
| higher and market conditions will dictate the final | | | | sure could be. On the other hand remember the |
| price. | | | | latin phrase "Caveat Emptor"-Buyer Beware. You |
| Now, from a personal point of view, the truth | | | | will have to think about it before you decide |
| about many of the properties that become REO's | | | | whether you want to buy or not. |