Within the first 6 months of 2022, mortgage brokers, investors and banks have had to foreclose on 20,750 REO properties. As a result, lenders’ portfolios have become flooded, leaving these properties to gather dust on the real estate market. Yet, few homeowners or investors realize the untapped profits and benefits that come with REO properties due to limited understanding of how they work. Together, let’s discuss what REO properties are and how investing in these homes can earn you money.
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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 Millennial 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, Millennial 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 Millennial 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.
