Provided by Roddy Real Estate Investing Academy
For years, I have been in the real estate investing business here in Texas. Every week, I talk to individuals that are eager to “make millions” in this business. Usually, one of the first thing they say on how they are going to accomplish this is they want to buy a FORECLOSURE.
From the onset, I look them in the eyes and ask one simple question, “What is your definition of a FORECLOSURE?”
Usually when they give me their definition, it is NOT what I consider to be the correct definition. See there are TWO types of foreclosures and if you don’t mind, I want to clearly define what these.
Let’s take a step back and I want all of you guys to understand ONE certainty. There are THREE ways/stages to buy real estate:
- Before an Auction- from a traditional sale (not delinquent of the lien) all the way to one hour prior to an auction.
- At an auction – enough said, generally performed by a trustee or constable.
- After an auction – by from a bank who is the owner. Usually represented by a local real estate broker.
The first type of a foreclosure has to do with the BEFORE stage. This is what I view as buying from a homeowner during the period of time that the property has been scheduled for an upcoming courthouse (forced sale). I have bought hundreds of these type of FORECLOSURES. This is where I approach the owner and negotiate with them a win-win offer that puts cash in their pocket after they (owners/seller) deeds the property over to me or my buying entity.
Next is the AT an auction stage. For the last 18 years I have been attending these TUESDAY auctions and buying FORECLOSURES on the courthouse steps. Here is the last time a deal/property can be in the FORECLOSURE stage. As you might know, most of the properties (or rather the liens that are auctioned off) DO NOT get purchased by investors like myself but rather the owed-party (lender) opens up the bid and there no takers! This results in the bank (lender) taking the property back (aka: they now own the property, first the time by the way) and this is what I call an REO (bank owned property).
REO’s are not foreclosures, but rather a result of a foreclosure auction.
Every month in Texas, thousands of properties are taken back (purchased) by the bank and these properties will eventually be sold to individuals, hedge funds and/or investors. What I have found through my years is that BANKS are usually NOT as motivated as individual sellers. I always use this analogy, “if you have a vault full of cheap money, how motivated can you really be?” Yes, banks don’t WANT these properties but they aren’t willing to give them away either.
That being said, there are OPPORTUNITIES with REO properties and here is where I need your help….. I am going to have one of the larger D/FW REO brokers come speak at the Roddy Roundup event on Thursday, December 1st. I want all of you to attend this FREE event if you can, but even if you can’t, I want you to post any and every BURNING questions that you want me to ask this speaker. He represents ALL the big banks that want of off load these properties they have acquired from the FORECLOSURE (forced) auction. Now is your chance to pick the brain of “the guy” that handles these types of properties, locally.
In the section just below, please post any question you want me to ask the REO Rockstar broker and I will be sure to ask him what I feel are the best questions.
If you do this, I will do my best to RECORD this session and provide this to all of you that ASKED a question in this blog post (your question needs to be a good one though).
Thanks for reading and I hope this brought some clarity to the differences between Foreclosures and REO’s…..
Until next time, go forth and prosper,
Roddy Real Estate Investing Academy – Since 1963, we’ve helped people make money in Texas real estate.
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