Choosing to invest in Nevada real estate can be remarkably profitable; especially with the growing number of REO and foreclosed properties available on the market. Each of these procedures is very prominent as a means of investing in real estate. Although sometimes referred to as equivalents, they are actually distinctly different. REO is the acronym for Real Estate Owned, which suggests that a property is owned by the bank. A REO generally occurs as the resultof a foreclosure and it is crucial foran investor to fully understand how the process works.
In the case that a homeowner fails to make mortgage payments, for at least three consecutive months, the lender will attempt to take legal possession of the property. In the state of Nevada, an uncontested foreclosure may take 3- 5 months and redemption is not considered as an option. It is possible; however, that the homeowner may delay the process by contesting the procedure in court, or even by filing bankruptcy. The foreclosure is concluded when the judge authorizes the sale of the property. The final step of the procedure involves the auctioning of the property at what is called a trustee sale. Deed of Trust states refer to foreclosure sales as trustee sales. At trustee sales, in an auctioning setting, the property goes to the highest bidder. Keep in mind, the investor has limited or no opportunity to inspect the home prior to potential purchase.
If an investor wins the bid, then the investor assumes the property and title. If the property does not sale during the auction, then it becomes an REO property. When a home is not sold to an investor through the foreclosure process, the lender who has current possession of the promissory note will attempt to sell it on the open market. Once the title is transferred to the bank, then the property is deemed real estate owned by the bank. At this point, the bank authorizes a professional real estate agent for marketing and sale.
Purchasing a real estate owned property is a less risky investment in that the lender prices the property lower than the market value. The lender must rid of all liens associated with the title prior to sale, along with any physical defects that exists within the property. The bank has to be sure that any tenants or squatters vacate the property. Most importantly, this type of sale allows the investor an opportunity to inspect the home prior to purchase. Unlike in a foreclosure, the REO property investor has the option to pay with cash or finance it through an actual mortgage.
The purchase of a REO property requires a level of expertise in order to accommodate the various rewards and risks associated with such investment. Whether you are purchasing a property at a trustee auction or opt to purchase real estate owned property, it can be a very profitable way to ascertain real estate. Buyers can avoid the displeasure of real estate investment disasters by performing due diligence and perform research prior to finalizing any investment purchase.