Someone recently suggested that I write and article entitled “REO for Dummies”, patterned after the popular “Dummy” book series. I understand the concept, simplifying things so that absolutely anyone can understand the information, but I can’t bring myself to pair REO and dummy in the title. Purchasing REO properties is for people who want to make a smart choice. They don’t have to be “smart” about the market, that’s what I’m here for. They just need to understand the basics of what REO properties are and why they are capable of being a great deal, especially in today’s market.
So, class is in session! Let’s talk REO basics for smart investors. First, REO stands for Real Estate Owned, it means that the property is now owned by the lender. A property does not become an REO overnight. First it goes through all of the steps of a foreclosure, including an auction. If the property does not sell at auction it reverts to the bank or lender. It then becomes their right to sell the property in order to retrieve their original investment.
You might be thinking, “Wow, if it didn’t sell at auction then it probably isn’t worth purchasing.” You might be right, but it’s worth further investigation. Sometimes a foreclosed property won’t sell at auction because there are disadvantages to purchasing it at auction. Once the property becomes as REO the lender becomes a motivated seller and will frequently offer incentives, concessions or allowances to qualified buyers in order to make the property more attractive. This is just one of the ways that a REO property can be more advantageous than buying at auction.
Check back for my next installment when I share more information about why you should seriously be looking at purchasing REO property. You can subscribe to the blog by clicking on the RSS button. You won’t want to miss this information.
The advice and tips offered in this blog are intended to be solely informational and do not apply in all circumstances. Make sure that you consult a real estate professional, financial consultant, attorney or accountant before taking any action. For further information or questions please contact Gabriella@IARNY.com
