Foreclosure Houses - REOS and AuctionsForeclosure Houses - REOSThe more we get involved in preforeclosures in a 'hot market', the more appealing alternative forms of foreclosure investing become. In the spring of 2005, for example, I actually went to my first foreclosure auction. In this particular scenario, we were looking at a property about which we knew more than anyone else at the auction. Before, we went to the auction, my associate had purchased the 2nd, with a face value of $13,000, for $3,000. In addition, one of the particpants actually held the 3rd position deed of trust. Although, it was already on public records none of the other bidders had bothered to run title to find that the two lots had already been legally separated via application to the county for a lot line adjustment. So that, although, the 1st deed of trust was attached to both lots, the county records showed that the house was on one lot and there was a separate adjacent lot. We actually had a 'buy/sell' on the adjacent lot for in place as soon as we paid off the 1st. And since the other bidders didn't understand the title situation, we got the property at auction for $1 over the minimum bid price. In addition, we were the only bid. I mention this to point out that you need to know what you are doing when you buy reo's - and you really need to know what's going on with the title and underlying liens.
More and more, foreclosure houses - reos in particular are looking more attractive because there are fewer potential surprises, because the bank owns the property and you can either do a deal or not.
However, this is a good, safe way to buy foreclosure properties if you have the cash available, you know your exit strategy and you have done adequate research on the title.
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