Know Your REO

The properties that a lender failed to sell it in an Auction is called an REO. Since the property has already gone back to its lender then the mortgage for the house no longer exists. The buyer receives the title insurance policy and the lender settles such things as eviction , tax liens and homeowner dues.

A bank or mortgage company forecloses on a property. After a few months of legal hassles, the lender finally gets clear title to the property and hires a local real estate agent. Of course, the lender, at this point, wants to try and recover almost all of the money lent on the property

The bank will hire a local realtor once the property has already been declared as an REO, to evict tenants , perform inspections to the property and also do minimal repairs on the property. Most banks prefer to sell the property in an "as is " condition.

Few investors are willing to buy a house more that its worth in today's economy because most foreclosed properties require a lot of repair and make over. It makes a lot of sense not to purchase the house above its market value due to the facts that foreclose properties requires a lot of repair. That is why , wise investors would wait for the properties to revert to the bank.

Having these type of property ( REO ) signifies that a bad loan has been given and every month as the bank earns these type of property it indicates that the bank is losing money , REO is not considered as an asset but as a liability.