Purchasing directly from the bank is the most popular way to buy foreclosures, and finding an available REO is not difficult.
Locate bank owned properties by obtaining reliable data from an organization that provides updated listings. Find properties that meet your investing criteria such as location, price range, size, and style. Determine whether you are buying to resell or to secure a residence for yourself. Determine if the property is a bargain by deducting the lender's asking price from the average market price of very similar properties in the immediate area.
Fixer-uppers can be great REO properties to buy, because most banks can't be bothered with repairs. There are great fixer-upper deals if you have the time and patience to make the necessary improvements. Beware of an REO that is in very poor condition. You don't want to get stuck with a foreclosure house that costs more to repair than you had originally planned.
Your goal as an investor is to realize a tidy profit. You can buy foreclosures at a 15-20% discount and earn a 35-40% return. As a homebuyer, you want to buy below market value with a low down payment, low interest rate and reduced closing costs.
There are many resources online that can help you find an REO. Bank Homes Direct gives members access to its free daily-updated bank foreclosure listing database.
