| Many people dream of owning their own home, but | | | | mediary between themselves and those buying REO |
| simply cannot afford the standard down payment or | | | | properties. This does not mean that a shopper will pay |
| high purchase prices. Fortunately, there are now many | | | | the same rate for a bank-owned home as they would |
| ways to obtain a home for a much lower price than | | | | for a privately-held bit of real estate, however, and this |
| even a year ago, though a bit of extra legwork is | | | | is due to several things. |
| often necessary. One of the simplest ways is buying | | | | Firstly, some people are buying REO homes because |
| REO homes from banks or mortgage companies, but | | | | they have degraded to a "fixer-upper" status while in |
| it helps to understand the process a bit before jumping | | | | the foreclosure process. This is because foreclosure |
| into it. | | | | requires a somewhat lengthy period of time and often |
| Certainly most people have read about the | | | | a family vacates long before the final days have been |
| staggeringly high number of foreclosure proceedings | | | | reached. Additionally, an REO home may be vacant |
| occurring each month. While some consumers are | | | | for a lengthy period of time which allows the home to |
| able to re-negotiate the terms of their loans in order to | | | | fall into disrepair. While most buyers would frown on |
| enable themselves to retain ownership of their homes, | | | | such issues, someone with a bit of skill and willingness |
| others are not so lucky. For them there tends to be a | | | | to work might find themselves buying an REO |
| single catastrophic route - foreclosure. This is the | | | | property in such a state for much less than the |
| process through which the original lender exercises its | | | | neighboring properties. |
| right to take the asset used to secure the loan, which | | | | When a property has remained in good condition, |
| is always the home, because the borrower has failed | | | | those interested in buying REO homes may enjoy |
| to meet the terms of the financial agreement or the | | | | special lending terms from the banks which own them. |
| mortgage. | | | | For instance, a potential buyer may be able to acquire |
| Once a bank or lender has entered into the | | | | a home for the lowest market value price possible and |
| foreclosure process the home might be sold at auction, | | | | then be asked to put down only a small amount |
| and if not it ends up as an REO property owned by | | | | against the purchase and might also have an incredibly |
| the lender. Millions of consumers and investors are | | | | low interest rate applied to their mortgage on the |
| now buying REO homes and properties in order to | | | | home as well. In this way, the bank is able to state that |
| enjoy reduced prices and better terms. | | | | it obtained the fair going rate on the home, and is also |
| It is important to note that most lenders who have | | | | able to simultaneously convert it back into a |
| REO properties will not view them as something to rid | | | | cash-earning asset. The buyer is able to say that they |
| themselves of at any costs, but will instead consider | | | | got a good price on the property and will also be able |
| them to be assets that must be sold at a fair market | | | | to enjoy the best repayment terms imaginable. |
| value. They work with special brokers who serve as a | | | | |