subject: Canadian Real Estate Investors Buying Reo Properties In Arizona [print this page] Real estate agents in Arizona are starting to notice a shift in the REO investor demographic and the Canadian population has a lot to do with it. This article will provide you with information about REO properties and why Canadian real estate investors are buying REO properties in Arizona.
What is an REO property?
REO stands for Real Estate Owned. When residential and commercial properties are sold through foreclosure auction, the owner usually owes more than market value to the lender. This is often prevents the property from selling and sometimes such foreclosure auctions do not draw any bidders. As a result, the property may not sell at the auction and the title reverts back to the financial institution holding the lien. The property then becomes an REO property in Arizona.
What happens to REO properties?
After the bank gains possession of the property, the mortgage loan goes away and the bank becomes responsible for any senior liens. On residential matters, the current owners are generally evicted, and repairs are made to make the property more attractive to potential buyers. On commercial assets, the bank will generally want to keep the tenant(s) in place, to retain an income stream.
Canadian real estate investors can then make an offer to the financial institution. After they have agreed on the price, terms and conditions, a contract for the sale can be negotiated.
Why are Canadian Real Estate Investors Buying REO properties in Arizona?
A significant advantage associated with buying an REO property is that Canadian real estate investors (and investors across the U.S.) have significant leverage and may be able to turn the property around quickly. Banks are trying to get the maximum return when they sell an REO property directly to a buyer, but they want to sell as quickly as possible. Banks do not like to hold onto REO properties for two main reasons: First, they don't want to tie up their resources in the capital reserves they are required to set aside for a foreclosed property; second, the management of REO properties is a difficult, as the bank is now responsible for things like property security, maintenance, utilities, taxes, etc.
In addition, Canadian investors are experiencing the best exchange rate in nearly three decades. This one fact alone could be one of the reasons why Canadian real estate investment in the U.S. more than doubled from last year to this one.
The median sales price of an REO property is half of what it was two years ago, and, on average, is currently priced at 60% less than a non-REO resale property.
