An REO or Real Estate Owned property is a home thats been through the foreclosure process and is now held by the lending institution. When borrowers default on their monthly mortgage payments, lenders will start foreclosure proceedings beginning with the notice of default, through the pre-foreclosure stage and into the final foreclosure step of the bank taking possession of the home, or REO.
REO homes are often sold by banks at below market values in order to sell quickly. REO homes are expensive for banks to hold because they require maintenance and the bank may have to repay any liens against the property.
REO homes can be a great option for anyone looking to buy a home because of the potential for savings. Being an REO, potential buyers have the ability to see the property and may be able to negotiate the closing costs if financing the purchase through the selling bank. In any case, home buyers should conduct a thorough Neighborhood Search and research local Home Values before making a purchase.
Find out more about the REO process: