That, of course, is the trick. With some lenders being so secretive about them, you won’t find REOs waiting for you to come along. In fact the most difficult part about this area can be finding the properties.

The most logical first step is to check with a lender. Go into your local bank branch and ask for their REO department. I tried that with five different banks. In four cases the people I talked with had no idea what I was talking about. In the fifth the person said that she knew and then connected me with their “real estate division.” It turned out to be a subsidiary of the bank that was a residen­tial real estate sales office. They didn’t handle REOs at all. It’s pretty hard to get information from the lender when the lender’s own people don’t know what’s going on!

High Interest Bank had an REO on its books. It was a three-bedroom, two-bathroom house in a fairly good area of town. High interest Bank was hop­ing in the worst way that it could get rid of that property. It wanted to convert it from a liability back into a mortgage that paid interest, in other words, it wanted someone to buy the property.

Banks could rent an REO and generate some income in that fashion. However, their expertise is in lending, not in prop­erty management. Besides, a rented house is harder to sell than a vacant one. As a result, they usually won’t do this unless the market is so bad that they can’t otherwise dispose of their REOs.

REOs are the most popular of the bargain opportunities in real estate. Here you might get a property for 5 to 50 percent off market value. Yet, they are usually considered a safer and easier way to buy real estate than purchasing either directly from the seller before a foreclosure auction or at the auction itself.

Buying an REO means getting it right from the lender. You usually get clear title and perhaps even title insurance. You may get a property that’s been refurbished. And if you’re careful, you can get one that’s way below market price.

Check the public notices in your area’s legal paper. It is usually published at least weekly.

However, one problem with this is that the location of the property is often given as a legal description. For example, suppose you learn that a certain property is in the foreclosure process, and the location is given as:

Lot 59 of Tract No. 1041 as per map recorded in Block 25 Page 46, in the office of the county Recorder, county of xxxx.

Unless you can translate this into a street address, it’s not of much help.
 

Mention real estate bargains and the first thought that usually comes to mind is foreclosure. If there’s a bargain to be found, most people assume that this is where it is.

Foreclosures do, indeed, offer opportunities for bargain hunters. Here it is possible to obtain properties lor a fraction of their market value.

For example, let’s say you’ve found a neighborhood where the average house sells for about $150,000. Being a bargain hunter, you’re looking for a highly motivated seller, one you can lowball and perhaps, in exchange for a quick sale, negotiate a price of 10 to 15 percent under market.