What about buying from the lender after the foreclosure sale? Usually, the lender has the biggest financial stake in the property. After all, they made an 80,90,95,97, or even 100 percent loan to the borrower to buy the property to begin with. Can you get a better deal from the lender once the property goes out of the lenders loan portfolio and into the lenders property portfolio? We think the answer is yes.

Lenders property portfolios are called real estate-owned portfolios, or REOs for short. As we have said, with VA REOs, some investors call them repos (short for repossessions). Real estate lenders are in the business of making real estate loans. Real estate lenders are not in the business of owning real estate. While lenders want to sell their REOs for as much as possible, they also want to move these REO properties as quickly as possible.

The REO Department

Our recommendation to you is to work with several lenders REO departments and see what happens. You may find a niche working with one contact in one lenders REO department. Once you can put together your first deal, you have a track record with that lender.

Your contact person will then start calling you with other deals perhaps before they become open to the public. We say it this way: Contacts with people create opportunities. Contacts create contracts.

Price

There are only two major concerns for you as a real estate investor in a real estate deal. The first major concern is the price you can get a property for after all is said and done. What is the rock-bottom price the owner will accept?

What about the price when you are dealing with REOs? We have already said that we think you can get a better deal from the lender after the foreclosure sale if the property doesnt sell. The lender is now the owner of the property. Getting rid of the property is now the lenders number-one priority.

Terms

The second major concern is the terms you can get a property for after all is said and done. Usually, if sellers get their price, the buyers get their terms. If buyers get their price, sellers get their terms.

For example, we will pay full price to a seller if we get our terms. What are our terms? We want to make no down payment. We want the seller to carry 100 percent of the financing. We want to make no monthly payments on the seller financing. If we get our price, we will give the sellers their terms. If the seller accepts our wholesale price, we will pay cash.

What about the terms when you are dealing with REOs? Ah, there is the rub. Are you going to have to pay cash? Are you going to have to qualify for a new loan? Are you going to have a combination of cash and new financing? Will the lender selling you the REO make you a great deal on the interest rate if you get a loan from that lender?