REO (Real Estate Owned) or Bank Owned Homes
REO properties, commonly referred to as bank foreclosures, are homes that are bank-owned. After borrowers default on their home mortgage loans, lenders must buy back the properties at auctions to recover their losses. Obtaining REO properties is a great way to get a bargain on a new home or rental property.
All REO properties were acquired through the foreclosure process and referred to as "foreclosed properties". REO properties are classified as a distress property because all lenders tend to sell their REO properties “as-is”. Very few mortgage companies and banks will make repairs or pretty up a property prior to putting it up for sale through a real estate company. Any property sold “as-is” can be expected to sell at a fair discount.
In light of the current market conditions, there are an unprecedented number of foreclosures, and lenders are being forced to cut prices in order to move homes off their books more quickly, this is a great advantage for today’s buyer.
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If there was ever a time to buy an REO property, the time is now. We have witnessed lenders slashing property prices by $50,000 or 20-25% of the previous list price. This is happening all over and in some areas it is artificially and temporarily suppressing prices.
"We recently purchased an REO property that 18 months earlier sold for over $314,000 and we bought it for $165,000…Wow!" Agnes Homebuyer
The longer a foreclosed property has been on the market, the bigger the discount.