REOs are those properties that failed to sell at auction after they were foreclosed upon. If you decide to invest on this business this would give you the best deal. Why? Well, first of all most properties that go to foreclosure auction in fact do not end up being sold. Most don’t even get any bids.
After foreclosure, the property are then managed by banks or financial institutions.
These institutions takes responsibility in clearing other liens and any back taxes owed on the property and often make repairs to the property to make sure they close the sale in the future.
This is an edge over buying a foreclosed property. Who would want to buy a property realizing there are more to work with on.
The reason why banks sell the properties immediately is that they want to keep their money moving, that’s why even though they sell it at a low price they still go for the kill.
The high cost on the maintenance of the properties made banks and other financial institutions to resell these properties at a very low price, giving investors the best deals that they can get.