REO Foreclosure Step by Step

We are investing in REO properties around Southern California and would like to share the process with everyone.

There are 3 phases to a foreclosure process:
1 - Pre-foreclosure: This is usually after the NOD (Notice of Default) has been filed. A typical sale for pre-foreclosure would be a short sale.
2 - Trustee sale: This is the process where the property is auctioned off at the county court house or at the property itself. This process is an auction format so you will need to have financing ready prior to bidding.
3 - REO or Real Estate Owned: This is when the property did not sell at the Trustee sale and the deed has been trasnferred back to the Bank.

For our investments, due to availability and numerous data available, we chose to concentrate on REO properties. We have found REO properties to be a good value compared to short sales due to willingness of the lender to take a loss.

For our research, we are scouring the MLS listing in the target neighborhoods. Once we find a few that are of interest, we have our Agent show us in and to make an offer. Of course there are other ways of finding REO properties, but we have an excellent agent and wanted to utilize his resources.

At this time, we have offers on 2 properties. We will wait to see if they are accepted.

Once an offer is accepted, we will go into detail on our exit strategy for the property. REMEMBER: Always know your exit strategy before going into any investment. This is a crucial step which will save your behind.

During the real estate boom that just passed, real estate investors did not think too highly of exit strategy because there was influx of buyers willing to purchase any property at any price. However, in the current market we are in, exit strategy is crucial and should be a deciding factor on whether you purchase a property or move onto the next one.

Wholesale Foreclosure Flip

With the foreclosure rate hitting all time highs in Southern California, lot of Real Estate Investors are starting to purchase Foreclosed homes and flipping them for a small profit.

Foreclosed homes are considered REO Homes and they are owned by the Bank. REO Homes are a better deal than buying in the open market for Investors because of the following reasons:

• Usually the bank that holds the 1st Trust Deed forecloses on the home. This means that the bank is usually in it for approximately 80% of the home value when it was originally purchased.
• Banks are in dire need, especially now, to reduce their REO inventory to satisfy their shareholders. This means that they are willing to take less than market value.
• REO Homes are usually in poor condition due to neglect. This can be due to time it takes to foreclose or due to prior owners trashing the place before they are evicted. This is a great opportunity for Investors to go in and rehab for a profit.

Wholesaling a Foreclosure Flip is just like Wholesaling any property to Real Estate Investors. You first need to find a property that is undervalued with potential for profit. Then, you will need to find other Wholesale Investors to sell to.

Due to our nationwide reach, we have Wholesale Property Investors throughout the country seeking Wholesale Properties to purchase. This Wholesale Property would be ideal for handy Investors looking to flip properties.

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Good Luck!