8 Reasons To Love Bank Owned Properties

This is an interesting question Robert Stapleton asked me, here is his blog entry and my reply;

Hi Mark,

I purchased the foreclosure list from the Oakland Co. courthouse today, and I was wondering is there a significant difference between working with foreclosures as opposed to pre-foreclosures?
I want to maximize my time and efforts to pursue the most profitable course.

Thanks for your assistance
Robert Stapleton

To me the universe is pretty much divided between pre-foreclosures (from filing of public notice to eviction) and REO's (houses taken by banks and vacant right now).

On a personal note, I have done pre-foreclosures in my early years - but lately i have been leaning towards the REO's market. I can give you couple of my reasons on why I like bank owned properties:

1. No title issues - you close, you get clean title policy without exceptions.
2. No back taxes - banks pay everything at closing.
3. No back utilities bills - banks once again pay everything.
4. No headaches of arguing spouses to solve ( you will understand this more once you are sitting in a living room, watching them fight).
5. No emotional dram to get involved in - in my wild years i have heard about every bad thing known to mankind coming up in these conversations.
6. House is vacant - i can go there as much as i want before i close.
7. I don't have to argue about "correct" amount of equity with the homeowner.
8. You can pick an area (i have) - and start buying every good deal in sight.

Most people think that banks are tough to negotiate - but to me the onslaught of foreclosures towards banks is so high that banks have no choice but to negotiate. Either that or sit on those houses for months at end.

My advice to Gold Plus on tonight's coaching call (the last 2 coaching calls were dedicated to REO's - finding, buying them at huge discounts) was this - if you are new to the game, do three REO's - put money in the bank and then do your first pre foreclosures. Because these deals are time consuming. And the reality is we are all impatient and want the check now and not later.

So if you want to maximize your profits and efforts, do your first deal out of a REO. I bought a house 67 days, renovated and sold today for a very nice sum. Some of you saw it on Saturdays during the bus tour. That was the one with the Jacuzzi and the kitchen island with track lightening.