You should also look at the title and find out if a foreclosure notice has already been filed and exactly how much is owed to the bank. This information is extremely valuable because it will help you to determine the correct amount to offer. When looking at the title also make sure to find out if there is more than one loan on the property, if this is the case you could have an issue. The first lender’s loan takes priority, if there is more than one loan then the second lender will need to get paid something to gain their cooperation.
If you are a first-time buyer, you will benefit greatly from hiring a real estate agent who has experience with (preferably in selling) REO and short sale properties. Hiring an experienced agent whom you trust is extremely important; dealing with the bank is much different than a typical seller. Another big advantage to hiring an agent is the fact that experienced short sale agents will be able to find listings that are not being advertised to the general public. Many times, a bank will not let the fact that they are entertaining short sale offers be known as they are hoping that property sells on its own without them having to take a loss. Without an agent, it is hard to find these pocket listings.
Investing in REO and short sale properties can be a lucrative venture. Not every property is as good as it looks on paper but with the right tools and know-how, you will be able to find the diamonds in the rough.