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Real estate properties are owned by banks. It couldn't be sold at auction. REO (real estate owned) possession, come into existence when the bank or the lender fail to get the amount due to them during public sale and consequently own the property. In the process they build up their inventory until they find a buyer to sell it.|Bank builds up inventory. Then finds a buyer}

This list does not yield any financial advantage and thus becomes a burden to them. These types of property to the banks are non performing loans or assets to the bank or to the lender.. The foreclosure property goes through a bidding process when placed for auction. Bid amount is the outstanding loan amount If the bid does not bring a higher price, the lender takes away the property and then the property becomes real estate possess (REO).

Investors come at this point They go behind these properties as banks are not in the trade of owning properties. And in some incidents the property can be bought at a lesser price than the prevailing market value. There is a global downtrend now. People are losing jobs. Banks are going for foreclosure. It is a great headache for the bank. People are unable to pay their dues to the banks. Bank closes the loan. It goes for auction But they are not forever successful. They are frantically trying to sell REO properties.

If you are a real estate financer you can successfully income from buying these assets form the banks. It is very important for your success and confidence to build a relationship with such lenders. Investors can buy these owned properties at a lower price and sell them at a price suitable to them in due course. But in the present financial scenario, investors are afraid to sell their houses because of low prices and moreover, it is difficult to find a good buyer. It is the latest craze in the investors market. Many people believe that the investors buy at a lower price under the prevailing market value. But really it is not a fact. What they do is to buy the real estate properties in bulk, at a wholesale price, from the banks and sell them to the customers thereby earning a profit. A superior investor always waits for the foreclosure property to revert to the lender.

If a customer goes to the bank directly he has to face innumerable formalities.. There you make an suggestion, a counter offer and a re-offer and so on, which may take weeks to materialize. Therefore, the more plausible way is to buy the real estate property from a private investor holding properties he bought from the bank.|Buy the property form private investor. He buys from the bank}

Whether you buy a real estate property from a bank or a lender you should work with such person who has a sound knowledge and understanding of the type of REO transaction.