REO properties are becoming a hot commodity for both novice and serious real estate investors. Also known as "real estate owned" these properties are returned to the bank after attempts have been made to sell the property through foreclosure auctions.

Real estate owned properties can include single or multi-family dwellings, commercial buildings, farms and vacant land. A common misconception is that bank owned real estate is sold for pennies on the dollar. This is typically not the case. The exception to this rule is to purchase REO's from a private real estate investor who specializes in purchasing bank portfolios at wholesale cost.

Private investors and investing companies have the ability to purchase distressed properties in bulk. Doing so allows them to buy real estate for pennies on the dollar and enables them to pass their savings along to real estate investors who want to expand their portfolios or individuals who are looking for a good deal for their personal residence.

Many banks publish their REO properties directly on their company website. Generally, a contact person will be assigned to the property. This individual is known as a Loss Mitigator and they will be the person who can make or break your deal. If you decide to make an offer on REO properties directly with the bank, be prepared for a lengthy process.

It is rare for the Loss Mitigation department to accept your first offer. It's important to understand that REO properties were once foreclosure homes with no equity and an inflated mortgage. More was owed on the houses than they were worth, which is usually why they didn't sell at auction. The bank is in business to make money and is going to wheel-and-deal to obtain the best possible offer.

If you work with an REO specialist you can avoid counter-offer after counter-offer. Typically, it is a quick-and-easy transaction. The private investor has already purchased the property. It is no longer owned by the bank, so you do not have to work with the Loss Mitigation department. Better yet, you'll be able to buy the property at a much lower rate than you will ever be able to negotiate with the bank. In some cases, you can buy REO property for seventy cents on the dollar. Do you know of any banks offering deals with that much built-in equity?

In the past, buying bank owned properties has been the turf of serious real estate investors. Due to today's market slump and home prices prohibitively expensive in many areas across the U.S., many first-time home buyers are investigating real estate owned properties.

It's best to work with an REO specialist when engaging in this type of real estate transaction. These individuals can guide you through the process, help you locate properties and ensure you submit the proper paperwork. Just one missing form can cause you to lose out on a lucrative real estate opportunity. Are you willing to take that risk?

If you are currently investing, or considering investing in real estate you would be wise to create your investment strategy now. Experts predict investing in REO properties will generate millions, if not billions, of dollars for savvy real estate investors. Will you be on the receiving end of this upcoming real estate boon?

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