REO Secrets Revealed
Posted on February 25, 2009 in the Real Estate category
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People are talking about REO these days. But what does REO really means? REO or Real Estate Owned are properties owned by mortgage companies, private companies or mostly by banks.
A number of foreclosed properties and reports on people losing their homes are common in the news nowadays. And investors are seeing this opportunity to buy and sell REO properties to gain profit on. Banks are more open now in providing list of REO Properties as compared before where you can hardly get your hand on the list.
REOs are often considered to be fabulous starter homes because the sales prices for these properties is generally lower than that of a similar non-REO property. In today’s market however, this may not always be the case. This is mostly due to the fact of the number of such properties in the market.
Even though a property is an REO, it does not mean that the owner will not make a profit off the sale. Remember, after the foreclosure process, the REO owner is now allowed to make a profit, which may affect the sale price. A buyer will generally be more likely to get a lower price when purchasing a home in the pre-foreclosure or auction stage.
Foreclosure is the process of the lender, may it be a bank or mortgage company, to sell the property in an auction known as Public Sale. And if the property does not sell during the process, the lender keep possession of the property.
After the foreclosure process, the property becomes an REO and the lender, mostly banks, take hold of this. Since banks are not in the business of selling properties, they would likely want to sell the property a lot sooner.
REO properties are sold in “AS IS” basis and it’s advisable to inspect the property before making the final offer. You need to get the services of a qualified home inspector who can assess the cost of repair needed for the property. You may use the assessment to backup your offer to the bank.
One way to purchase REO’s is through private real estate investors. These people buy REO’s at wholesale pricing and get’s discount for doing so. These discounts can be passed on to you if you decide to purchase the property through them.
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