| REO is real estate that is owned by the bank. The | | | | Of course a bank being an institution that profits from |
| abbreviation stands for Real Estate Owned. In most | | | | investment, will want to turn their asset into a usable |
| cases the property will have initially foreclosed due to | | | | financial investment. A house that is sitting there is not |
| the owner's inability to make payments, and at this | | | | helping the bank and so it's in their best interest to sell |
| point the bank will purchase this property and attempt | | | | as quickly as possible. This leaves buyers with some |
| to sell it at a public auction. If there are no bids placed | | | | extra negotiating ammunition. Usually in the case of |
| at this public auction, the bank remains owners of the | | | | REOs a buyer can bank on a purchase price that is |
| property and it will be sold as REO. | | | | quite a bit less than market value. As the bank will |
| A bank is not set up to deal with real estate | | | | want to turn over a sale quickly, all costs, including |
| transactions and the more time they hang onto an | | | | interest and the size of the initial down payment are |
| unsold property, the more it costs them in the long run. | | | | negotiable terms and can help you fetch the best price. |
| So, as you can imagine a bank is usually quite anxious | | | | Of course there are certain instances where you |
| to get such properties off their hands, and are willing to | | | | should be wary of REO purchases. In most instances |
| sell fast and cheap. This is an obviously advantageous | | | | an REO purchase is a great investment and offers a |
| situation for buyers looking for a smart real estate | | | | 100% safe investment. But beware, just because a |
| investment. | | | | bank owns such a property does not mean that it is a |
| There are some distinct advantages to purchasing an | | | | great deal. You have to ask certain pertinent questions: |
| REO over a foreclosure. With REO's you are usually | | | | Were there any liens on the property? Was the |
| able to set your own purchase schedule because you | | | | property damaged and is that why it did not fetch a |
| will not have an auction date you have to work | | | | sale as a foreclosure? Again, take full advantage of |
| around. Also, you will be entitled to a normal inspection, | | | | your rights to a certified home inspection and even an |
| whereas with a regular foreclosure you are not | | | | appraisal if you want to know more about the value of |
| entitled to this normally standard subject. With an REO | | | | the property in question. |
| purchase you won't have to worry about tenants and | | | | Another great way to be solid and sure on your REO |
| possible evictions as you sometimes have to deal with | | | | purchase is to work closely with a real estate agent |
| in the case of a foreclosure purchase. | | | | who specializes in REO sales. |