Bank Owned Homes - Profit Opportunity

After almost five years of booming real estate values the market is changing.  Buyers have pulled back and the price trend has flopped from up to down.  Couple that fact with slightly higher mortgage interest rates and stricter lending practices and you have thousands of financially distressed home owners.

Thousands of home owners have seen the value of the homes fall and they now owe more than the market price of the home.  Many can no longer make the payment and they can't sell because they owe more on the mortgage loan than the value of the home.

Get it? We're in the midst of the most severe housing market downturn in years and there is no end in sight. Some will panic - Cooler heads will profit! 

Real Estate Crisis Numbers

    * Existing home sales are off 17% from the peak that occurred in September 2005. The seasonally adjusted annual rate of sales, at 5.99 million in April, was the lowest figure seen since June of 2003.

    * It's worse in the new home market where sales have crashed 29.4% from the July 2005 peak. What about March sales? They were the lowest since June 2000.  Home builders have been forced to slash prices to squeeze out even a few sales.

    * Here's the most shocking new, homes for-sale inventories have skyrocketed. As of this April, there was a mind boggling 4.2 million existing homes begging for buyers.

Statistics indicate that is the highest level ever!  It means that right now there are at least 1.7 million that can't be sold.

Flash: U.S. foreclosure filings in May nearly doubled in comparison with last year. According to a RealtyTrac report notices of default, scheduled auctions and bank repossessions in May were up 90% year over year, and up 19% since April.

Foreclosure Auctions with No Buyers

It's no surprise that the rate of forecloses is climbing in many areas of the U.S.  The even worse news is that many experts predict that trend will surge over the next three or four years.  The result will be so many foreclosure auctions that they will out number interested buyers.  It's very similar to the real estate crash of the 1980's.

Just as they always do... news media will soon be featuring real estate stories that are so negative that only a handful of wise investors will recognize one of the great wealth building opportunities of the decade.  Here's the story...

Just as in real estate crashes of the past, there will soon be so many homes offered at foreclosure auctions that they will overwhelm buyers.  There just won't be enough buyers with enough cash to buy them all.  Thousands of homes will go unsold.

Bank Owned Homes

When a home does not sell at a foreclosure sale it becomes the property of the bank.  That's where alert investors have a chance to make serious money.

Banks are in the business of lending money not owning tens of thousands of homes.  They want to get rid of those homes and they want to do it fast.  They often are ready to sell those homes at deep discounts.

When a bank has an excess inventory of real estate owned (REOs) it indicates they've been guilty of making bad loans.  Bank examiners don't like that and it can mean higher costs for the operating money they have to borrow from the Federal Reserve.  A bank's stockholders just won't stand for that.

During the last real estate crash wise investors learned that banks were often willing to dump many of those REOs at bargain prices.  But banks don't broadcast the fact that they are selling homes at a loss.  You have to have the perserverance to dig in and find the bank manager who has the authority to make the deal.

If you have any interest at all in achieving financial freedom we urge you to keep a close eye on this growing real estate disaster and get ready to cash in on REOs.

About the Author:  Mark Walters is third generation investor.  You can find his web site here: http://www.realestateforeclosureinvesting.com/reo.html