| Real estate owned properties are those whose | | | | properties are an example are effectively money that |
| ownership is still held by the bank (or other real estate | | | | is 'frozen' from the banks'/lender's perspective. Indeed, |
| lender), in the aftermath of an unsuccessful | | | | as the bank continues holding the real estate owned |
| foreclosure auction. | | | | properties, it is aware that they are likely to be |
| Normally, when bankers and other lenders lent for real | | | | depreciating, meaning that it is not only 'freezing' its |
| estate development purposes, they get the property | | | | money in them, but actually also losing money through |
| they are financing as 'security' for their loans. This is to | | | | the depreciation of the real-estate owned properties. |
| say, in event of the borrower being unable to repay | | | | As such, it is the in the banks' best interest to get rid of |
| the loan used in developing the property, the bank (or | | | | the real estate owned properties as soon as possible. |
| any other lender in question) would repossess the | | | | In a bid to get rid of the real-estate-owned properties |
| property, and then auction it to recoup their money. | | | | as soon as possible, it becomes imperative to lower its |
| But it so happens sometimes that upon the borrower | | | | prices, and it is here that the opportunity to get an |
| failing in their obligations for the property, and the house | | | | otherwise great house being sold for a song lies, if you |
| being put up for sell through an auction, it is still not | | | | go shopping for real estate owned properties. |
| bought; for one reason or another. Such a property is | | | | To be sure, many of these real-estate owned |
| now held by the bank/lender in question, and it is | | | | properties do tend to be in run down conditions. Yet |
| referred to as a 'real-estate owned' property. | | | | even taking this into consideration, the difference |
| Banks (and other lenders) are of course not in the | | | | between the prices at which they are sold and the |
| business of real estate. They typically don't have the | | | | prices of similar properties in the market tend to more |
| interest to go about managing properties - and are | | | | than make up for the costs to be incurred in the repair |
| therefore usually keen to sell the properties that | | | | of the properties. |
| happen to be in their possession as real-estate owned | | | | There are two methods through which banks and |
| properties, as soon as possible. | | | | other lenders sell real estate owned properties: through |
| Indeed, real-estate owner properties reflect on the | | | | the real estate brokers, or by advertising the |
| bank's/lender's accounts as 'non performing assets' - | | | | properties, and then selling them off themselves. |
| and this is a bad reflection. Banks and other lenders | | | | So the next time you see an advert for real-estate |
| are usually keen to have as few of these 'non | | | | owned properties, see in it the opportunity to own |
| performing assets' on their books as possible. The 'non | | | | what can potentially be a very nice house at what can |
| performing assets' of which real estate owner | | | | turn out to be truly fantastic price. |