What is an REO? REO means Real Estate Owned. Everyone is talking about REOs these days. But before you consider buying one, there are a few things you should know about REOs. These properties are generally owned by banks, credit unions, mortgage companies and sometimes private companies.
It has become increasingly common for the news to report foreclosure issues and homeowners losing their houses and other effects of the mortgage crisis. As a result there have been dramatic increases in the marketing of REOs to the general public. It used to be that you could barely get your hands on lenders' foreclosure lists. But these days, everyone is trying to sell REOs.
Owning an REO is a good opportunity as you get to save much as compared to buying non-REO property. However, in today's market where the number of such properties dramatically increases, you may not always get the property lower than the current market value.
Even though a property is an REO, it does not mean that the owner will not make a profit off the sale. Remember, after the foreclosure process, the REO owner is now allowed to make a profit, which may affect the sale price. A buyer will generally be more likely to get a lower price when purchasing a home in the pre-foreclosure or auction stage.
REO properties goes through the process of foreclosure where the property is open for sale in an auction or Public Sale. And if no offer is accepted, the lender keep possession of the property.
After foreclosure and when banks get hold of the properties, they would likely want to sell these properties fast to avoid losses incurred in possessing the properties.
REO properties are sold in "AS IS" basis and it's advisable to inspect the property before making the final offer. You need to get the services of a qualified home inspector who can assess the cost of repair needed for the property. You may use the assessment to backup your offer to the bank.
In order to get a good deal for REO's, it's advisable to seek the help of an experienced real estate investors. You may either buy an REO through them or ask for their help in going through the process of closing the deal with a bank or mortgage company.
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