What are REO Properties?  

REO—or Real Estate-Owned—properties occur when a lender, bank, or investor takes ownership of a foreclosed property that fails to sell either on the market or during an auction. There are 3 common instances where ownership transfers to the bank when the original owner either defaults their mortgage into foreclosure, transfers ownership to pay off their loan through auction, or after death if their heirs can’t or won’t buy the property. As REO properties are typically sold “as-is” on the market, these homes frequently remain unsold under the lender’s control.  

Benefits of Buying REO Properties 

Despite these homes being passed between owners, there are numerous financial benefits to purchasing REO properties outside of the standard real estate market for both buyers and investors. Here are a few key benefits to expect when purchasing an REO property:  

1. Low Prices 

One of the biggest benefits of buying REO properties is that lenders seek the most immediate value out of these failed sales to prevent continued profit losses and liability claims. As a result, most banks will list REO properties at a discount or have more a negotiable price to guarantee the quickest sale. With initial bids going at least 20% below current market price, these lower prices come as a relief to new homeowners with the median market price at $428,000. Thus, REO properties offer a bargain to potential buyers and investors with limited capital.  

2. No Outstanding Costs 

Most REO properties guarantee have no taxes or title liens to deter buyers. After claiming the REO property, banks will remove all title liens as well as pay all taxes on the property. As such, investors don’t need to worry about the value or price of the REO property, thus saving them time and money. Nevertheless, buyers should hire a title company to conduct a property title search for any hidden legal issues about ownership or property bills.  

3. Major Property Returns 

Real estate investors can significantly benefit from investing in REO properties as either a landlord or house flipper. Landlord investors can turn REO properties into rentals, thereby generating additional income and potentially sell the REO property later for a higher value than bought after appreciation. Likewise, investors looking for quick profit can buy an REO property at a discount to provide better remodeling to sell onto the real estate market. No matter the method, investors can earn tremendous profits by investing in REO properties. Since REO properties tend to be distressed and in disrepair, though, a home inspection is crucial before final closing.  

Entrust REO Properties to Millennial Title 

Whatever the real estate service you provide—mortgage broker, bank lender, attorney or another title company—let Millennial Title secure closings for your REO properties. Flexible and experienced in handling various title transactions, we at Millennial Title provide support for all properties in your portfolio through these following services:  

National  

With Millennial Title’s National Services Division, our experienced team help to streamline workflow around your process using advanced integration and automation technology for an efficient and hassle-free closing. By offering investors the chance to increase revenue, unlimited access to notaries and underwriter partnerships across the United States, we at Millennial Title ensure the best value for REO properties wherever you buy.  

Commercial 

At Perpetual Title, we also offer complete commercial title services to manage clients’ legal and title transactions from our experienced, trusted attorneys and team members. Investors will most benefit from owning or co-owning REO properties through commercial investments, as they are among the few types of real estate investments that easily recover from market instability. Meaning investors can buy REO properties wholesale without prior capital or experience.   

Overall, REO properties present great financial investments for both real estate homebuyers and investors. Although investment opportunities for REO properties are limited, Perpetual Title can help broaden those chances through our national and commercial title services. Regardless of whether you’re buying a home, selling, or investing in property, rely on Perpetual Title’s team of reliable real estate professionals to help manage the REO properties in your portfolio. To learn more about our commercial and national title services, contact us today. 

The post 3 Reasons to Invest in REO Properties first appeared on Perpetual Title.

Be Prepared Financially Before Making an Offer

Many buyers will take a cash offer, even if it is lower than a similar offer from someone with uncertain finances. If you can do a cash offer, this may be the best way to encourage a seller to pick you, but if you can’t, a strong pre-approval letter is the next best option.

Another option to strengthen the deal is to offer above asking. Many would-be cash buyers will offer at or below asking. By offering above asking, your offer will also stand out above the rest.

Be prepared by having your mortgage company get as much of the underwriting done as possible, and make sure you have all the necessary paperwork together yourself. This will include things like your previous tax returns, pay stubs back at least two years, and any alimony or child support you may owe. By having yourself together financially, you’ll be able to react quickly when putting in an offer on a home.

Send a Personal Letter to the Seller

A personal letter explaining why you love the home and hope to buy it can also help sway a buyer in your favor. It doesn’t have to be long, in fact short and from the heart is the best way to go about it. If the seller is considering similar offers, a warm letter letting them know how much joy their house would bring to you might help them choose you over others.

A letter to the home seller can potentially set you apart from others.

Choose a Local Lender

While a national lender may be your first thought when looking for a mortgage company, they don’t have a vested interest in keeping it local. Local companies are more likely to know others in the area you will need for your team, and will be more interested in your application compared to a company with thousands of applications floating in.

Don’t Skip on Inspections

It’s very tempting to waive your right to an inspection of the home in order to make things go more smoothly. This is a very dangerous idea, however, as you have a lot to lose should there be something wrong with the house.

An inspector’s job is to check for problems that could make owning your new home disastrous. If construction was done without permits, or if the house has a cracked foundation, buying the home could set you up for a serious loss.

Likewise, you should always check the title before committing to homeownership. Most mortgages demand it, and even if you are doing a cash offer, it’s common sense. If you purchase the house and it turns out the people selling don’t actually have the title, you’ll be the one with the financial loss.

You also have the right as the buyer to choose the title company unless there is a specific clause in the paperwork stating otherwise. You’ll want to select one with professional experience and plenty of years in the industry so that you know their work will be something you can trust.

For title insurance advice or assistance, reach out to the experts at Perpetual Title today. You’ll quickly discover why we’ve been named the fastest-growing local title insurance company in the industry.

The post How to Compete in a Tight Housing Market first appeared on Perpetual Title.