The unprecedented number of foreclosures and defaulted mortgages happening now has given rise to a huge new opportunity for alert real estate investors. That opportunity is called Bulk REO Investing, and the opportunity is huge. Knowing the value of the properties you are considering is invaluable. Having solid real estate comps gives you this information, a quick search on your InvestorCompsOnline account can provide this for you. Foreclosures are at the heart of the Bulk REO business, so let’s consider the foreclosure process.
Understanding the notion of Bulk REO’s requires understanding of the foreclosure process.
When a home owner begins to miss payments on their mortgage, the lender begins to send late/overdue notices to the home owner. The lender directs the subsequent timing of the actual foreclosure proceedings. From that time through public auction is called ‘preforeclosure’. Foreclosure is completed when the property is put up for auction. The lender regains ownership of the property if there are no buyers at auction. The designation of ‘REO’ (Real Estate Owned) is then attached to the foreclosed property.
Typically, lenders list their REO properties with local real estate agents in hopes of selling the property to a retail buyer who will pay full price. But as a consequence of the weak economy, and based on the current real estate comps listed, lenders are frequently selling their REO properties far below their actual value. But the price of receiving such great pricing is the need to purchase multiple REO properties (a ‘package’) rather than individual properties. Thus the name, Bulk REOs.