| The big question in many buyers' minds seems to be | | | | of why banks are not so thrilled to take the home |
| the difference in all these properties that are listed. | | | | back. In the more recent cases, people have bought a |
| Each property has its own story on how it came to | | | | home for way over the actual market value, as well |
| the market, but in this article, we will be focusing | | | | as taken a second mortgage or "equity line" on a |
| specifically on the difference between an REO home | | | | home. This is a completely upside-down situation for |
| and a Foreclosure home. | | | | the bank because no matter what they try to sell the |
| An REO home, in essence is a foreclosure home. | | | | home for, they will never be able to recover the losses |
| Although this sounds rather confusing, let's look at the | | | | in this current market. |
| process. First, a home goes through default, | | | | When a person buys a foreclosure at an auction, they |
| pre-foreclosure, and then foreclosure. When the home | | | | are truly buying the home "as-is". This means they are |
| is at the foreclosure stage, it is put up for auction. An | | | | buying the home, any second mortgages, which get |
| auction is held and anyone can attend. If the property | | | | assumed by the buyer, as well as any tax liens. |
| is not sold at the auction, the property goes back to | | | | Sometimes people who purchase a home at auction |
| the bank. When this happens, the property is called an | | | | think they are getting a huge deal. In some cases this |
| REO property. | | | | may be true. In most cases, however, they are getting |
| When the home is at the auction, it is still referred to as | | | | a lot more than they bargained for. They then look at |
| a foreclosure home. If someone buys it at the auction, | | | | their once amazing purchase and start to minus off |
| they have bought a foreclosure home. So, you will | | | | profit lines when all is said and done. In some cases, |
| probably be wondering- well what is the actual | | | | people end up overpaying for the home by buying it at |
| difference? | | | | the auction rather than buying it off the market. |
| The main difference between and REO home, also | | | | In all, it is safe to say that buying a bank owned home |
| known as a bank owned home, and a foreclosure | | | | is much safer than buying a foreclosure home. It is |
| home is that the REO home is free and clear. When | | | | best to leave the foreclosure auctions up to the |
| the bank takes the home bank after the auction, they | | | | experienced investors. They are the ones that can tell |
| have to clear and pay off all tax liens and mortgages | | | | the difference between a good deal and a bad deal; |
| on the home that exist. This would include back taxes, | | | | and, at times, they are even sometimes wrong. Do |
| second mortgages and such. This is a good example | | | | yourself a favor and play it safe! |