25 cent for a dollar

Recently, I met a friend sharing with me a very inspiring story. I thought that was very interesting and I want to share this with you. Recently, one of the area he lives nearby has tremendous amount of R.E.O available in market. R.E.O stands for Real Estate Owned. These are the property that the bank bought back from the auction when the previous owner fails to pay back the mortgage obligation and bank foreclosure upon it. Because bank is not in real estate business, these properties holding bring no financial benefit from the bank point of view. The bank would like to GET RID of these R.E.O houses as soon as they can. First, they list the property at the market price. However, with recent slowdown in real estate market, houses become harder to sell. The Bank starts to accumulate more of these R.E.O as more foreclosure pop in the market. What my friend did is that he focus in these type of R.E.O. He use a creative criteria to narrow down the properties of interests and he is able to get a bargain deal with 25cent for a dollar. This is his technique
1)R.E.O
2)Has been on market for more than 100 days
3)Asking price 10% below fair market value
After he narrow down the houses into these criteria with the area he is interested, he make an all cash offer with 25% of the asking price. After many many rejections, he finally got one bank accept his deal. It's amazing how cheap he can purchase the property from R.E.O.