| REO or Real Estate (Bank) Owned Properties can be | | | | - The price is more attractive - typically 20% or 30% |
| great investments for both individual home buyers | | | | less than offered at foreclosure auction. |
| (owner occupiers) or investors (own to rent) relative to | | | | -There is a period of due diligence now allowed for the |
| foreclosures. The primary difference between REO | | | | buyer to generate a more intelligent bid or offer as |
| and Foreclosure properties is the stage at which the | | | | they can visit an open house, conduct a home |
| asset is in its life cycle of disposition. With Foreclosures, | | | | inspection, etc. Although the home may still be sold "As |
| homes have been foreclosed by banks or lending | | | | Is", it can be a more informed purchase. |
| institutions due to the failure of the previous owner to | | | | - More flexible financing - first time home buyers can |
| comply with his scheduled mortgage payment. | | | | take advantage of credits (FHA) as well as more |
| The process often starts with a Notice of Default | | | | flexible financing than 'cash-only' |
| (NOD) and ends with an Auction on a courthouse | | | | - less issues to deal with such as repairs or evictions |
| steps. Foreclosures are often difficult to purchase | | | | as these are typically handled in pre-marketing and |
| because the sellers often ask full value of the original | | | | post-foreclosure. However, if they do exist, they can |
| loan, sometimes in cash with no financing. For this | | | | be identified in the details of the terms of sale. |
| reason, among others, many foreclosures do not get | | | | - With banks, many of them have what is known as |
| purchased at the auction. In addition, at times, with | | | | "carrying costs". This means they must pay to keep |
| foreclosed properties, evictions have not yet taken | | | | the home on market and thus, can effectively |
| place. When properties or homes at foreclosure | | | | negotiate a lower price |
| auctions do not sell, then they go back to be owned | | | | - Finally, there are many more formats to be able to |
| by the bank or lending institution as bank-owned and | | | | buy these homes. Not only can you buy these homes |
| are called REO. | | | | through traditional methods, but there are newer web |
| Overall, waiting for a foreclosed property to be REO | | | | sites that offer online bidding - especially time limit |
| may be a better investment for an owner occupier or | | | | bidding for REO homes for sale. |
| investor due to the following: | | | | |