What is an REO?
Before the property is labeled as an REO (Real Estate Owned), it is first known as a foreclosed home. When a bank or mortgage company forecloses on a home or property owner, the law requires that the property is held in a public foreclosure auction by the bank. If no bidders purchase the home, then the bank will end up owning the property, which is why REOs are also referred to as “bank owned properties.”
The bank is now responsible for the home and the taxes. Since the bank cannot legally sell REO homes to buyers, they procure the services of a real estate broker or agent to list the home for sale to the public. The broker or agent, along with the REO Manager, will then negotiate an offer within the bank. Most REO homes are typically sold in “as is” condition, but the good news is, you are still able to make inspections during the inspection period. And while most banks will not make the repairs, there is never any harm in having your Agent request repairs to be made, or for a credit at closing so you can make the repairs.
