For years, prudent investors have purchased properties that financial institutions have taken back in foreclosure. (REO properties) for the most part Banks and other lending institutions do not like to keep real estate they have obtained in this manner. The maintenance, the possibility of vandalism and often other factors such as pressure from bank examiners or stock owners result in lending institutions being anxious to dispose of these properties. A combination of these and even other factors can lead to discounted purchase opportunities. Learning who is in charge of Real Estate Owned (REO) can lead to these wonderful opportunities. Often these properties are also wonderful fix-up opportunities as well.
It is not uncommon for lending institutions to provide financing to dispose of these properties, however, they generally prefer to be cashed out and be rid of the property.
Many investors have developed a relationship with these institutions and are notified prior to the property being actually foreclosed and taken back. The reason this happens is there may be the opportunity to coordinate the acquisition of these properties directly from the defaulting party by the use of a deed-in-lieu of foreclosure. This can result in a reduction of legal costs and in some instances a foreclosure off a borrowers credit records.