But the problem they were facing is that they were being outbid by local real estate investors. Interestingly, NPR was referring to them as “vulture investors”. They seemed to take issue with real estate investors buying the properties to renovate and resell for a profit.

So help me understand this. NPR has a problem with investors going in and buying properties that the banks clearly want to sell – and fixing them up? What would they prefer – these properties sit vacant until they rot away to the foundation?

It occurs to me that many of these properties are likely so run down that no one other than a real estate investors who specializes in rehab will buy the property. Also, owner occupants get all sorts of bidding advantages on, for example, foreclosed FHA homes. They usually get 2 weeks or so to bid on properties until the bidding opens for investors.

Oh, and let me mention that as the reporter covering the story pointed out, the family did end up find a house for the good price they were looking to get.

It just makes you wonder if some do-gooder in Washington isn’t dreaming up some type of special government program to punish “vulture” investors for trying to make a profit. Perhaps a 100% tax on profits which could be redistributed to some housing subsidy program. Don’t thinks it out of the question…stranger things have come out of Washington lately.

Here’s another great question from a subscriber…

Question:  “What’s the best way to find bank owned (REO) properties?”

Answer: All realtors are not the same.  You need to find realtors who work primarily with investors.  These are the realtors who are going to work with what are called REO’s, or bank owned properties.  An REO property is a bank term that means Real Estate Owned.

Banks that hold REO properties are motivated sellers.  That’s why we focus on these types of properties. 

When bank takes properties back, like Deutsche bank, they typically find one realtor in a given city or area.  They will list most or all of their properties with that one realtor.  Only a handful of realtors in a given city will list most of the bank owned properties. 

What most people don’t get is that the listing realtors for bank owned properties generally like to list houses, but they generally sell these properties.

You have to find another investment realtor who will represent you as the buyer.  This type of investment realtor wants to sell properties to investors.  They generally won’t be the listing agent. 

There are a few ways to find an investment realtor to help you find cash flow properties.  Look for realtors who advertise “investors special’’ properties. You may also find those realtors at your local real estate investor association meetings.”

Robert Elder comments, “In 29 years of buying houses, the single most common source of buying houses for me has been realtors that were selling bank owned (REO) properties because when the banks takes a property back it becomes a problem to the bank.  The problem is the bank has taken back that house, that business property, or that four flex.  We the investor, by making an offer, are the solution to the bank’s problem.”

If you are making an offer to buy John the homeowner house, it’s a much more emotional decision to cut the price ten thousand dollar.  Why?  That’s ten thousand dollars less money in John’s pocket.  

On the other hand, if you are making an offer on a bank owned (REO) property, the is much less emotional about that decision.  If the bank cuts the rice ten thousand dollars, it’s not going to come out of the banker’s own pocket. 

Please make a comment below on this article…I’d like to know what you think. 

Question: "I am currently looking for bank owned (REO) properties to buy.  I’m looking for something that is in good condition, and I want to turn it around and sell it.  At this point, I don’t have a job.  I’m going to make offers on these bank owned properties to Realtors.  But I was informed that realtors ask for money and proof of funds.  At this moment, since i’m unemployed, I don’t have any of those. So how can I buy and sell these houses without spending any money for this?"

Answer: "The short answer is that you really do need the proof of funds to make offers on these properties.  That means getting private money or partnering with someone who has cash to work with. 

You might think of some other types of deals to chase.  I would suggest that you start doing advertising in craiglist or bridgedog to get some interested clients call with houses for sale.

One of the more recent Wealth Building calls we did was six almost free ways to find motivated sellers.  We dealved into both of these approaches.  One of the approaches we talked about was using craigslist to place advertisements to find motivated sellers. 

Here is a video with some ways use craigslist:

The goal is to find a motivated seller.  The reason you want motivated sellers is they will give you equity for FREE if you solve a problem they have.  You might be able to buy a house for half price if you do a good enough job in solving that problem. 

Use a technique like the one on the video to get motivated sellers to call you.  When a motivated seller calls you, proof of funds is never an issue.  Money is not an issue, assuming the deal is good enough.  You will find the money if you have a good enough deal. 

Do you need to know you are getting a fantastic deal?  Absolutely. 

So don’t worry so much about your proff of funds.  Worry about how to find a motivated seller."