The secret is to choose the right real estate agent to be your buyer's agent. The process of buying a foreclosure is different, and most real estate agents are unfamiliar with the process. I specialize in foreclosed properties (commonly referred to as REOs -meaning Real Estate Owned by corporations) and have the experience you need to make an informed decision. I have worked with more than 80 banks and asset management companies. These include HUD, Fannie Mae, Freddie Mac and USDA. Each company and agency has their own unique guidelines for selling their real estate inventory. All of the companies and government agencies want to expose their properties to the most potential buyers and sell them at a price as close to market value as possible. But, there is no secret list of bank owned properties selling for $1 to $300. This is one of many misconceptions about foreclosures.
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Yes. They are typically sold to local municipalities or nonprofit organizations, after they have went unsold in the open market. Individual investors are able to buy distressed properties at significant discounts also. These properties are referred to as scratch and dent properties. They are sold in bulk -the minimum is typically 12- and they are located in different states. They are called scratch and dent because they have some title issue that prevents the banks from selling them in their current condition, and the bank feels it will cost them more to clear up the title issue than the property is worth. They may have back taxes and additional leins against them. The investor assumes all the risk and liability of the property, without knowing what issues the properties have when they buy them.
