The Dark Side to Buying REO Property in Atlanta
REO properties, like foreclosure properties, at first glance appear to be an excellent, limitless source of potential profit while at the same time allowing the investor the personal success of having bested the bank at the real estate game. The problem is, the first glance with these kinds of deals is often deceiving. There is a dark truth to buying REO properties the banks hope investors never find out about.
When an owner is unable to pay their mortgage for whatever reason, the lender currently holding the lien steps in and assumes control of the property. This property is now listed as a foreclosure and is placed for sale to the highest bidder at a foreclosure auction. However, the minimum cost of these properties at auction takes into account not only the amount of money remaining to be paid on the lien but the fees associated with repossessing the house and listing it for auction as well. For this reason many investors choose not to buy the property at auction prices, and the home does not sell. This leaves the bank holding a property they can do nothing with, and as a result the property is listed back on the open market as an REO property.
These REO properties are sold for a price lower than that listed for auction, however the property is still owned by the bank and the bank still wants to regain as much of its investment as possible. As a result, a potential buyer will still be paying a higher price for the property than could be obtained using other means. Also, there is normally a reason it was passed up at auction in the first place, and with the current market of foreclosure shoppers if it was not snatched up it is most likely something that should be passed over.
There are many alternatives to buying REO. Wholesale properties are opening up a whole new world to Atlanta investors. Wholesale properties are properties that have been located and contracted for sale by a wholesaler, a real estate enthusiast with an eye for bargain priced property with a high potential resale value. The wholesaler then turns around and sells the property "as is" to an investor willing to make the necessary repairs in exchange for being able to take advantage of the high resale value. The wholesaler makes a small profit, the investor makes a large one, and everyone walks away from the bargaining table happy.
Motivated seller leads, or pre-foreclosure properties, are another well kept secret of the real estate industry. Pre-foreclosure properties are homes whose current owners are unable to meet the financial obligation of their mortgage and will be foreclosed upon soon but are still in the possession of their owner rather than the bank. The owners of these properties are often in a great hurry to make a sale and pay off their mortgage, in order to avoid the black stain of foreclosure on their credit record. As a result, they are willing to take almost any reasonable offer, and as there is no third party involved the investor stands to take all of the gain.
REO properties are not all they appear at first glance; however, with the proper knowledge and contacts a savvy investor can move beyond these myths and carve a niche for themselves in the vast real estate market found in Atlanta. So where can wholesale deals, motivated sellers, and this elite niche in general be found? The answer is at myHouseDeals.com.
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