REO Listings: A safer, easier way to buy foreclosures. January 17
Most people know that foreclosures are the bargain basement buys within the real estate business. But buying a foreclosure can also involve huge risks, especially for those who are not knowledgeable about the process and the major legal responsibilities that taking ownership of a foreclosure entails. REO properties, however, offer many of the same discounts without the inherent risks, and you can buy them just as you would any property listed with a real estate broker. You don’t have to show up at an auction with a cashier’s check; you have a chance to conduct inspections, and you can pay for an REO with a regular home mortgage.
REO stands for “Real Estate Owned”. The term is used by bankers and real estate brokers to describe properties that lenders sell after failing to sell them at a high enough price at the foreclosure auction. If a bank forecloses on a house and then cannot sell it at auction – or perhaps does not get a high enough bid at the auction – the bank will keep the property and sell it through normal Realtor channels. These are REO properties, and almost every large bank has an inventory of REO homes.
REO houses are usually marketed just like other homes, with a Realtor’s sign in the yard or an ad in your local newspaper. But because they are owned by banks that are highly motivated to sell them, they usually sell at significant discounts. And because the seller is also a mortgage lender, you can often negotiate special financing if you buy an REO and let the bank you buy it from handle your mortgage.
To shop for an REO, just contact real estate brokers and ask them to show you properties that are in the REO category.