Foreclosures and REO’s

What is a Foreclosure and  REO? The word foreclosure refers to the legal process that a bank or lender uses to satisfy a loan balance. The acronym REO stands for Real Estate Owned, meaning a property is owned by a bank or lending institution. This said, a foreclosure and REO property are essentially the same thing. Bank-owned properties are usually acquired because the owners have defaulted on the loan, which means they are unwilling or unable to continue making payments, or the property failed to sell at a Trustees auction.

After a property becomes an REO, the bank usually wants to get rid of the property quickly to get it off their books. This explains why REO properties are often priced well-below the current market value. To make foreclosures more appealing, the bank will often attempt to remove liens and/or fix obvious problems that the property might have; however, most properties are sold in “as is” condition.

Purchasing an REO property is much the same as purchasing a regular piece of real estate. The major difference is that you will be dealing with a bank instead of an independent seller. Most banks will not disclose any information regarding the homes general condition for two reasons, first, in most cases they do not know anything about the property, and second, there are no laws that require them to disclose anything on a regular REO property. Despite these contingencies, it is worth it to pursue a foreclosure if only for the below-market value price and instant equity bonus. Start your search today, using the pre-foreclosure search on Foreclosure Radar.