Investors and buyers here in Orange County and Southern California have found discounts in REO bank-owned properties since the first of this year.  And more investor opportunities will improve if mortgage defaults continue to increase.

As the inventory of bank-owned properties grows, owners of REO bank owned properties will be more open to negotiate price and terms.  Prospective investors like these opportunities.

Some banks and mortgage loan investors who now own REO properties are challenged these days to dispose of their inventories.

Investors and Buyers who specialize in acquiring bank owned properties like their chances, and subject properties are known as real-estate-owned ...  REOs. 

Once a home ends with foreclosure and goes up for trustee sale auction, a bank will send a representative to bid as much as the bank is owed.  The lender will usually let it go if they are outbid.  Banks in that situation are made whole and want to move on.  But if the bank is the only or highest bidder, the property becomes an REO bank owned home.

There are some REO bargains to be found ... primarily in areas that were hardest hit by the mortgage scams and sub-prime lending for people who weren't qualified to buy homes. 

However, most REO properties are not selling at prices far below market value during this time.  Investors with competing bids have returned to the market, and REO sold prices have reflected market enthusiasm.

Some bank-owned sales transactions are complicated.  Sale terms must be approved by the lender or their attorneys.  It's challenging to deal with bank-owned properties.  Some REO owners are in offices separated from loss-mitigation departments and struggle to process the listings.  And REO owners are understaffed.

 Real estate investing should be part of your overall financial plan.  Before buying any REO bank-owned real estate, understand the real estate laws, especially local rules and ordinances, and tax ramifications, and other financial issues.

Before you buy a REO property, consult with a qualified tax or financial adviser who will help you assess your situation. Get your financials in order first and know what you can afford and risk.

Foreclosure investing is not easy.  There are lots of REO buyers who have failed ... Why?

• They didn't hire a REALTOR.
• They paid too much.
• Bought the REO property subject to liens that they did not know about.
• Didn't Get Title Abstract prior to purchase.
• Properties needed too much money for repairs or renovation.  
• Home located in rent control district.
• Unable to find good tenants.
• Failed to research expected rents.
• Didn't break even on attempted flip.

Make sure you spend lots of time and study the market, talk with experienced investors and Realtors and real estate professionals who will help you.

Hire a REALTOR or real estate professional who has foreclosure buying experience.  Always look for a Real Estate advisor who can provide significant local information, that about title, and get you through the deal.

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Harrison K. Long, Explore Group Properties, Coldwell Banker Previews, Irvine, CA.

www.BuyersExploreHomes.com  ~  www.ExploreTheOC.com