If you’re a homebuyer on a budget, buying a distressed property such as an REO could be a great option for you. Here we’ll provide an overview of what REO properties are and what you need to know before determining if this property is right for you.
REO stands for “real estate owned” and these are properties that the lender or mortgage investor owns. A home doesn’t automatically become an REO once a lender takes possession, though. In order to recoup losses and get rid of the property in short order, a lender will first try to sell a home at auction. If a home doesn’t sell at auction, the lender then tries to sell the real estate-owned property to minimize their losses. At that point, it becomes an REO property that stays on the lender’s books for a while.
What’s the Difference between REO and Foreclosure?
Foreclosures and REOs aren’t the same. A home that is foreclosed upon becomes an REO property if it fails to sell at auction.
Buying an REO home can be a good idea because they’re usually priced low as the lender wants a hassle-free process and hopes to create some competition between buyers. However, these types of homes often need repairs, and the lender usually won’t pay for any of the work because they don’t want to spend any more money than they already have on the home. REO homes are often sold as-is, so you can get it for a lower price, but you might have to spend a lot of money fixing up the home.
What you have to do:
1) Find an agent experienced with these types of sales
2) Don’t skip the home inspection
3) Make a strong offer
If you’re interested in checking out REO properties in the Denver area, contact Metrowest today. We specialize in these types of sales and would love to help you start the process!