What are REOs?
Posted:
Wednesday, April 15th, 2009
Category:
Real Estate License
REOs, or Real Estate Owned properties, have become a multi-billion dollar industry in light of the recent mortgage crisis. Homes that don’t sell or won’t sell are often bought by banks and real estate companies, because they can afford the expense of holding on to the property until it sells. Investors and first time home buyers are making a big profit off of these properties, because they are often sold at bargain prices just to get them off the hands of the real estate agencies and banks that own them. REOs generally come from foreclosure auctions. The properties that don’t sell are taken back by the bank or lender, but they don’t deal with real estate. Thus, the properties are then sold to homebuyers, investors, or real estate agencies.
These homes are often sold at up to 50% below market value, simply because the banks want to get rid of them. Foreclosures are a good investment because they can be purchased cheaply, as can pre-foreclosure properties. However, REOs are often the best investment because when you buy them from the bank, you will get a much better deal on the home that you buy. Many of these homes are sold in ‘as-is’ condition. This means that the home could be able to be lived in or even entirely brand new. However, the home could also have mold, a leaky roof, infestation problems, and even need totally remodeled. This is where the buyer should beware.
Buying REOs is a great option for the people that want to save money on a home, but what good is saving $40,000 on a home when it will cost you $75,000 to fix it up and make it livable? It’s all about taking the time to find the deals and make sure that you are only considering buying properties that are actually good deals, and not buying a dump that isn’t worth it. Many websites will try to make you pay for listings of REOs in your area, but you can easily obtain a list of these properties and foreclosed properties by calling some local places. Local banks will have lists of the properties they own, and the sheriff’s office in your county should have a list of homes that are up for foreclosure.
There are so many REOs on the market right now that many people are able to buy homes that might have never had a chance to do so otherwise. By giving these people a more affordable option like a real estate or bank-owned property, they are able to buy a home in a market where many others can’t.
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