Real Estate Owned or REO are properties owned by banks, mortgage companies or private companies. These are properties that were taken back after unsuccessful foreclosure.
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 a property goes through this complex process it becomes a REO property. You can buy these REO properties from the bank. Since banks hates to holding properties because they are responsible for the taxes, they will more that likely love to sell a REO property to you.
REOs are sold AS-IS. This means that what you see is what you get. You will need a qualified home inspector to guide you with this step of your REO purchase process. Only a qualified inspector will be able to reveal latent flaws or issues that you will need to consider before you purchase the REO. You will need to factor in the costs of potentially repairing, replacing or rehabilitating the necessary sections of the property into the price you will be paying.
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.