What Is an  REO?

Real estate owned (REO) properties are properties that have been foreclosed on by the bank, which are in possession of the bank in an effort to recoup the original mortgage loan. When a property is auctioned at a sheriff’s sale and does not sell, it becomes an REO property.

Foreclosure Auctions

Given that many auctions fail to meet the minimum price established by the bank, the properties listed revert back to the bank and become REOs. The foreclosure minimum bid price includes the outstanding balance of the mortgage loan, the interest owed, attorney’s fees, and the costs of the foreclosure process.

Foreclosures As REO Properties

After a property becomes an REO, the bank will try to sell the property by evicting the occupants, clearing the liens on the property, and establishing a price. REOs are usually not renovated and are sold “as is” through a broker.

Finding REO Listings

REOs, which are usually priced at market values, are listed by the bank, though investors may want to contact an agent to see all the REOs available in a certain area.

Making an Offer on a REO

Purchasing an REO requires negotiation, therefore, investors should prepare a written offer that specifies that you are willing to buy the home “as is.” The offer should also include an escape clause that allows you to exit the deal if an inspection reveals unexpected property damage.

The offer should be made for or near the closing price. A real estate agent, real estate attorney, and contractor can help investors find the best deal.

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What Is an  REO?

Real estate owned (REO) properties are properties that have been foreclosed on by the bank, which are in possession of the bank in an effort to recoup the original mortgage loan. When a property is auctioned at a sheriff’s sale and does not sell, it becomes an REO property.

Foreclosure Auctions

Given that many auctions fail to meet the minimum price established by the bank, the properties listed revert back to the bank and become REOs. The foreclosure minimum bid price includes the outstanding balance of the mortgage loan, the interest owed, attorney’s fees, and the costs of the foreclosure process.

Foreclosures As REO Properties

After a property becomes an REO, the bank will try to sell the property by evicting the occupants, clearing the liens on the property, and establishing a price. REOs are usually not renovated and are sold “as is” through a broker.

Finding REO Listings

REOs, which are usually priced at market values, are listed by the bank, though investors may want to contact an agent to see all the REOs available in a certain area.

Making an Offer on a REO

Purchasing an REO requires negotiation, therefore, investors should prepare a written offer that specifies that you are willing to buy the home “as is.” The offer should also include an escape clause that allows you to exit the deal if an inspection reveals unexpected property damage.

The offer should be made for or near the closing price. A real estate agent, real estate attorney, and contractor can help investors find the best deal.

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