Understanding REO

July 8, 2009 | Filed Under Work At Home

by Angela Kleinertski

REOs are properties that the lender has failed to sell at auction. At this point, since the home has gone back to the lender, the mortgage no longer exists. The lender also settles such things as evictions, tax liens and homeowners dues. The buyer will also receive the title insurance policies.

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.

Few investors are willing to buy a house more that its worth in today’s economy because most foreclosed properties require a lot of repair and make over. It makes a lot of sense not to purchase the house above its market value due to the facts that foreclose properties requires a lot of repair. That is why , wise investors would wait for the properties to revert to the bank.

Banks does not want to own these type of property since having these properties signifies that its a bad loan that the bank has given and is a liability and not an asset.Every time that a bank owns an REO indicating that they are losing money.

About the Author:

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