The Facts About REO

REO is said to be the property that failed to be sold in an auction, hence the property has already gone back to its owner and the mortgage no longer existed. The lender settles eviction tax liens and the dues from the home. The buyer receives the tittle insurance policy.

A bank or mortgage company forecloses on a property. After a few months of legal hassles, the lender finally gets clear title to the property and hires a local real estate agent. Of course, the lender, at this point, wants to try and recover almost all of the money lent on the property

When the property is being sold as an REO, the bank will hire a realtor and in some cases, evict tenants and perform their own inspections and or make minimal repairs. All banks work differently but most will want to sell the property in the “as is” condition.

In today’s recessed economy, few investors are willing to purchase a house for more than it is worth. Additionally, foreclosure properties oftentimes require numerous repairs and renovations. In most cases it does not make sense to purchase a property at a price above current market value, let alone pour more funds into repairs. Instead, savvy investors are willing to wait for foreclosure properties to revert to the bank.

Banks do not want to own property, which is not what they are set up for. Basically, an REO is the sign of a bad loan that was given by the bank and the REO is a liability, not an asset. Every month that a bank owns a piece of property means they are losing money.