Buying an REO (Real Estate Owned) Property

As I explained on the previous post about “Buying Short Sales or pre-foreclosure homes,” these types of homes offer some benefits but not without some delays. And as I mention on my other post about “Buying a Home at Foreclosure Auctions,” there are more risks for a regular buyer than there are benefits.

Another option available is an REO purchase. Even thought an REO purchase may not take as long as a Short Sale or be as risky as Foreclosure auction, there are a few things that you should be aware of when looking to buy an REO property.

Properties that have passed through the foreclosure process and later offered at a foreclosure auction, most often will not bring in a winning bid. When these properties don’t generate a winning bid, the lender becomes the successful bidder and claims ownership over the property.

A lender makes money by making and selling loans. A lender actually loses money when it holds properties on its portfolio. Therefore, the properties that did not generate a winning bid and have reverted back to the lender are sold on the MLS through real estate brokerages much like a regular listing.

An REO listing, just like a Short Sale, gives you the opportunity to inspect the home prior to committing to the purchase and the contingencies are handled much like a regular purchase. REO listings offer great prices but often are sold “As is.” Although lenders are highly motivated to sell these properties and offer them at very low prices, they most certainly will not accept a ridiculously low offer.

One of the disadvantages of buying an REO property over a Short Sale property is the disclosures. On a Short Sale, although you may be negotiating with the lender, the actual homeowner still is the property owner and you should receive disclosures about the property condition, the neighborhood, etc from that current owner. But with an REO, the lender is the owner of the property therefore the lender cannot attest to the property condition and neighborhood information and any other information available with disclosures on a regular purchase.

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There are many properties to choose from and in many different locations so you may not be able to find them all on the MLS, contact me so I can maximize your search and your results.

If you are interested in seeing which property either through a regular sale, Short Sale or REO gives you the best value for your money and are also interested in seeing how you can combine this purchase with an FHA loan or CalHFA loan, call me or contact me so we can sit down to discuss all your options.

Buying a Short Sale property
Buying a Home at Foreclosure Auctions
Buying an REO (Real Estate Owned) property

April 2nd, 2008 · Filed Under Real Estate Information

Comments

8 Responses to “Buying an REO (Real Estate Owned) Property”

How to Buy a Home Through a Foreclosure Auction - San Jose California on April 2nd, 2008 10:31 PM

[...] Buying an REO (Real Estate Owned) property SHARETHIS.addEntry({ title: “Buying a Home Through a Foreclosure Auction”, url: “http://micasamidinero.com/myhome/2008/buy-foreclosure-auction/” }); [...]
Homeowners guide to Short Sales and Preventing Foreclosure, alternatives on April 3rd, 2008 4:23 PM

[...] are not in the business of property management or selling real estate. Foreclosing on a home or selling a home as an REO (I will explain about this on a different article) cost lenders a lot of money so the last thing [...]
Homeowners guide to Short Sales and Preventing Foreclosure, selling on April 3rd, 2008 4:24 PM

[...] now than lose a lot more money later by going through the foreclosure process or adding another REO property on their books and having to pay property taxes, insurance and maintenance on these [...]
What is Wrong with Buying One Today and Losing One Tomorrow? : San Jose Real Estate : My Home and My Money on July 17th, 2008 1:45 PM

[...] Yet some homeowners are opting to take on that risk because they believe lenders are too swamped. “So many people are foreclosing, is it cost effective for lenders to go after all of these people?” said Steve Hawks, a Las Vegas real estate agent who handles lender-owned properties also known as REO’s. [...]
Buying a Short Sale or Pre-Foreclosure Property : San Jose-Santa Clara County Real Estate UNCENSORED on September 12th, 2008 1:55 PM

[...] Today more and more buyers are asking about buying foreclosed homes, but apparently there is a big misconception amongst buyers that everything not being sold as a regular sale in today’s market is a foreclosure sale. This is not the case as in some cases the sale could be a short sale or a pre-foreclosure, a foreclosure auction sale or an REO sale. Contrary to what you may think, there are differences between these types of sales so we are going to explore the differences between buying a short sale, buying at a foreclosure auction and buying an REO property. [...]
A Homeowner’s guide: Short Sales and preventing Foreclosure Pt4 (The ramifications) : San Jose-Santa Clara County Real Estate UNCENSORED on September 12th, 2008 3:22 PM

[...] of whether you are looking to buy a regular home, buying a short sale, buying an REO property or considering selling your home as a regular sale or selling it as short sale or may be looking [...]
Opportunity for Buyers in a Slow Real Estate Market : San Jose-Santa Clara County Real Estate UNCENSORED on October 10th, 2008 12:30 PM

[...] at auctions not receiving any bids and being turned back to the lender and into the market again as REO properties. These are today’s mainstream news! These are the news you see on a day to day [...]
Foreclosure scams grow rampant in todays Real Estate market : San Jose-Santa Clara County Real Estate UNCENSORED on October 10th, 2008 1:58 PM

[...] of inventory, many of which are being sold as short sales, sold at foreclosure auctions or sold as REO properties. However, this market has also brought to our doorsteps scam artists hoping to prey on the [...]