Buying REO Properties

By Doherty • February 15th, 2011
LAS VEGAS - MARCH 21:  Prospective buyers look...

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Real Estate Owned properties or REO are properties which are in the possession of a lender as a result of foreclosure, forfeiture after, or an unsuccessful sale of Homes for Sale in Yakima WA at a foreclosure auction.

The consequence of not paying the final amount of a mortgage or home loan is that the home or property may enter the foreclosure process. If a property is offered on auction, it means that the lender (a bank or any financial institution) is offering the property for sale.

What happens is that the total amount that the bidder has to pay to the lender to become the owner of the auctioned Travis County Texas Homes for Sale is more than the properties market value. If there is no bidder and the auction ends without a sale, then the property would slip back to the lender. The lending insitution will legally repossess the property. These usually happen when the amount owed on the home is probably higher than the value of the foreclosed property.

If this happens then these properties are called real estate owned properties, or REO. And so this property is listed as an REO and therefore classified under the category of (non-performing) asset.

The lending institution has now the right to evict the current owners when the property is repossessed. To make the repossessed property sellable to potential buyers, damages and repairs are done.

You might be wondering banks or other lending institution would want to sell REO properties. Banks or other lending companies will never want to keep REO properties because for one, they need maximum returns from these investments and not the homes per se. Lending institutions want to sell these REO properties as soon as possible because they want to earn interest by liquidity in money. Another reason is that Homes for Sale in Anaheim CA need maintenance, and so banks wouldn’t want to spend time and money on these endeavors. When it comes to selling these REO properties, banks or financial institutions have a separate department to manage the selling process of these properties.

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