Buying Below Market
The main reason why you want to consider purchasing REO properties is the ability to buy them for less than the current fair market value. It goes back to that basic principle of buying low and selling high. REOs can often be purchased for less than fair market value.
Don't fear an REO with a high listing or asking price. Many REOs start with a higher price only to be sold later to an investor with a price much less than the original asking price.
Your first offer to buy below market value may be rejected. That does not prevent you from submitting second and subsequent offers. You can submit as many offers as you want.
When local real-estate markets are slow, REO properties are likely to be sold more quickly at favorable terms. The last thing REO departments want is for their inventory of houses to grow. Their primary goal is to sell their properties.
Don't expect super deals on properties that are likely to sell quickly. Properties located in hot markets, such as resorts or fast-growing urban areas, are not going to be highly discounted. Properties located in deteriorating areas or unstable neighborhoods will likely be offered at fire-sale prices.
If your local area is experiencing a general real-estate market slowdown, the REO department is likely to offer better terms and accept a lower price for its property.
