Who Benefits From Purchasing an REO Property?

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What is an reo property

What is an REO property? REO, or real estate owned, property is property that has been foreclosed on by the bank. This generally occurs when the owner has failed to pay the mortgage on the home. REO properties are not only houses, though, as they can also be trailers, condos, commercial property, or most other types of real estate. This makes it especially helpful to qualified institutional buyers who are looking into REO property preservation and Reo properties for sale, as it increases their buying market.

When a homeowner has defaulted on the home mortgage, the home is referred to as a distressed property. Much of the time, a distressed property implies that the property is in poor physical condition because the owner did not care for it. That is why banks will often list properties for sale in as is condition, because spending the time and money to remodel the property themselves is not in their best interest. By listing these bank owned Reo properties for sale, however, the buyer has the chance to buy them at discounted rates and fix them up themselves.

Not only can institutional buyers purchase homes this way, but they also can through a short sale. When a property is listed for short sale, it simply means that the property is sold for less than what is owed to the lender. The transaction is completed before the lender has a chance to foreclose on the home, so in reality the buyer is negotiating with the owner of the home, as well as the lender. In most other cases, however, REO property for sale does not involve the owner at all. REO property preservation may be easier with a short sale, as the owner may be living in the home while it is still in good condition.

REO properties can be bought at lower rates than other real estate because they are being bought directly from the bank or agency, not from the owner. In addition, an institutional buyer may have an easier time purchasing an REO property or performing Reo property preservation than other buyers, as these buyers are already legally recognized as qualified investors. Whether you are looking for properties that are big or small, an REO property may be what you have been looking for.


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