| As a real estate investor I am frequently asked, | | | | properties. Since REO homes are generally priced |
| what does REO mean? REO is an acronym for | | | | below market value, investors can earn a good |
| real estate owned which refers to foreclosure | | | | return on investment by rehabbing the house or |
| properties owned by the bank. Once foreclosure | | | | offering seller carry back financing. |
| homes are returned to lenders, the bank holds | | | | Investing in bank owned homes can save home |
| the property title and is responsible for maintaining | | | | buyers and real estate investors' time and money. |
| real estate until it is sold. | | | | There is no need to spend time negotiating with |
| Another question buyers want answered is what | | | | creditors and tax agencies to remove liens and |
| does REO mean in terms of obtaining reduced | | | | judgments. If foreclosed homeowners continue |
| prices? In general, banks charge a slightly higher | | | | residing in the home, banks commence with |
| price for real estate owned properties. In addition | | | | eviction action. All the time-consuming and messy |
| to recouping financial losses from unpaid mortgage | | | | details are handled by the bank; allowing buyers |
| loans and the foreclosure process, banks remove | | | | and investors the opportunity to purchase and |
| attached liens and judgments in order to sell real | | | | quickly take possession of the property. |
| estate with a clean title. | | | | Buyers of foreclosure houses quickly discover |
| Bank owned homes are sold directly through each | | | | that lien removal and tenant eviction can be costly |
| lender's loss mitigation department or a designated | | | | and time consuming. Buying a foreclosure home |
| real estate agent. Properties are sold in as-is | | | | can take several months, while REO home |
| condition at reduced rates. Buyers are responsible | | | | purchases can be quickly expedited. |
| for repairs and renovations to return REO | | | | Multiple sources are available for locating REO |
| properties to livable condition. Some homes are in | | | | properties. Bank of America, Remax, Prudential |
| immaculate condition, but the majority requires | | | | and Countrywide publish bank owned foreclosure |
| some level of repair, while others are in need of | | | | lists directly on their websites. Countrywide |
| complete renovation. | | | | participates in the Department of Housing and |
| Most mortgage lenders obtain broker price opinion | | | | Urban Development Neighborhood Stabilization |
| appraisals to arrive a fair market value. BPOs can | | | | Program which offers grant money to buyers |
| be conducted as drive-by or internal inspections | | | | who purchase REO homes in areas hit hard by |
| and are less expensive than traditional home | | | | foreclosure. |
| inspections and appraisals. Although BPOs can | | | | First time home buyers can locate multiple REO |
| provide an estimated home value, buyers should | | | | homes for sale to obtain real estate at |
| obtain a full inspection and professional appraisal | | | | substantially reduced prices. Buyers can maximize |
| prior to making an offer on the property. | | | | savings by utilizing first time home buying |
| If additional problems surface during the home | | | | programs and applying for NSP grants. |
| inspection, buyers can use this information to | | | | These are just a few options for buying REO |
| further negotiate the purchase price. It is a good | | | | homes. The Internet provides a wealth of |
| idea for buyers to take photographs of major | | | | information for locating distressed properties at |
| repairs and obtain repair estimates which can be | | | | reduced prices. Many local realtors offer seminars |
| presented to the bank handing the REO sale. | | | | to help buyers learn about the advantages of |
| REO properties can be a good option for real | | | | buying bank owned foreclosure properties. Take |
| estate investors, first time home buyers, and | | | | time to learn the advantages and disadvantages |
| individuals looking for an affordable vacation home. | | | | of purchasing REO real estate. Doing so can help |
| Investors oftentimes seek out bank owned real | | | | you further negotiate the price while locating the |
| estate for use as lease-to-own homes and rental | | | | perfect home in the perfect location! |