Bank REOs

I went driving for properties last week and came up with about 50 houses that are either rehab, wholesale, or flip potential. I am happy about my efforts. What I am doing now is trying to contact owners. So I’ve been thinking…I want more properties! My question is this: How do I go about getting bank REO property? Which department is usually the one that oversees this? What type of banks have REO’s? What about other sources? I’m sure you other REI’s have more information than I can imagine! Any information would be great! Thanks!


Most bank REO’s have to be listed through a RE agent to sell. So just look on the MSL and you will find many of them.

Heather Zaal

A quicker way is to go to your county courthouse and do a search for properties with “lis pendens” on the title. This will lead you to homes that currently are starting foreclosure proceedings. In the lis pendens info, you will see which bank is starting the foreclosure.
If you know anything about short sales and how they work, you could try doing a short sale. You will need to contact the loss mitigation department of the bank to start negotiating the selling price. Additionally, you will need to make as strong a case as possible that the homeowner CANNOT pay their debt obligation, and that the bank WILL lose money if they try to foreclose and sell the home themselves.
I am not an expert on short sales yet, but I have a general understanding that this is how it works.

Hope this helps!

Hi -

Actually, I’m unaware of any regulation that forces banks to list their properties; its primarily a case of expediency. A policy decision, more or less.

One group of people that bankers hate to deal with is bargain hunters – not that I blame them. Add to that the fact that each “prospector” goes through the process of reminding them that the bank made a bad loan and you begin to see their point.

And as a last tidbit, are any of these “adventure capitalists” likely to become solid (profitable) customers of the bank?

Nah,… don’t think so.

Here’s the bottom line: in most cases, Heather is correct. Just look through the MLS with your friendly RE agent. Ownership is pretty much spelled out in every listing I’ve ever seen.

On the other hand, if you take the time to develop a relationship with some banks and bankers, you may surprised at what you can accomplish.

However, the key word in that phrase is “relationship”. Get it?

Take care,

Eric C

Banks are more than happy to have an investor come get a bad loan off their books. It is good for them and prevents further loss. When I speak of banks, I mean Mortgage Lenders, not your typical walk-in retail bank.
I prefer NOT to deal with real estate agents if at all possible. they are an unnecessary annoyance to me. (btw, I’m a Mortgage Loan Officer) I have all the means I need to fully execute any real estate deal without a re agent, so why pay $5k to them??
I recently bought my own home from a FSBO for over 10% less than the appraised value. She was getting ready to go into foreclosure, so she wanted out bad. She brought $1,000 to the closing table, and paid all our closing costs. I had to spend $500 at close.
FSBO’s are a great source of deals to say the least!

Hope this helps!

Hi -

I agree with your FSBO advice and I can’t really argue with your idea of the Mortgage Lenders (although I was never a loan officer – I did own a mortgage company).

My advice is for those who want to deal with banks. Not lenders, just banks.

For years I made my living dealing with banks and bankers. I know them, I understand them and I can deal with their business concerns.

When most folks call a bank asking about REOs, they’re told “we don’t have any” or “we deal exclusively with ________ Realtors, contact them for more information”.

The real truth is that:

  1. In spite of what you’d think – no bank (or loan officer, for that matter) wants to be reminded of bad loans. Do any of us like to revisit our past mistakes with total strangers?

  2. They HATE to deal with these things. HATE, HATE, HATE. Can I make that point any clearer? How many “tire kickers” do you think they will see in just one business day?

  3. Their reputation is key. Its all about saving face (at least, most of the time). After all, what more do they have? Every bank has money, every bank offers checking accounts, savings, etc. But not every bank actually makes loans.

Everyone should read that last sentence again. Not every bank makes loans.

How is that possible?

Simple. There are several business models that banks can follow; and you will find many variations (or combinations) of those. Making loans is just one part of onel; that’s all.

Quite frankly, I much prefer to deal with real banks – the “walk in type” and real bankers. Although I’ve purchased many things from the majors, the real profits lie with the small local banks where, in most cases, you can actually talk with a real person.

How well you are received depends entirely on your ability to sell yourself and solve their problems.

Again, it comes down to that “relationship” thing.

Take care,

Eric C

PS - if you ever doubt that bank care as much (or more) about not appearing foolish, check out some of their current investments (or past ones, for that matter). Those classes of investments that are in favor get more attention while those that are not get kicked to the curb.

If you’d like some specific examples, just ask.

Couldn’t agree more about your thoughts on walk in banks.

I’d much rather deal with a walk in bank on a loan than some monolithic lender like Countrywide or whoever. I love the personal service.

Also, I’m sure you’re right about them not wanting to be reminded of their mistakes in lending…since they are more personal and more low volume.

Great points.