What’s the Difference Between an REO Property and a Foreclosure?

High home prices and limited inventory in Denver have prompted many buyers to consider distressed properties – short sales, real estate owned (REO) homes, foreclosures, etc. as a way to break into homeownership. These types of purchases are different than traditional sales, but they can often be a great value – if you know what to expect along the way. Here we’ll break down the differences between foreclosure properties and REO properties so you can decide which might be a better fit for you.

  1. In a foreclosure situation, lenders auction off homes after the owners stop paying their mortgages. These properties are sold at public auctions. The property becomes an REO after it does not sell at auction, and the bank takes ownership of it. These bank-owned properties (REOs) are listed and sold by real estate agents.
  2. Be advised that buying at auction can be difficult. Not only are you trying to outbid professional real estate investors, but often these purchases are cash only.
  3. Auction homes are sold sight-unseen, which means you’ll have no idea what repair jobs face you after you complete your purchase.
  4. Buying an REO property is easier. The bank that owns the property wants to sell it as quickly as possible, so they hire a real estate agent to close the sale. You can buy one of these bank-owned properties by making an offer, just as you would with any other type of home sale. The bank will either accept or counter, and you proceed just as you would a traditional sale.
  5. REO properties can be a great value. Sure, the bank will want to get the most they can from the sale, but REO properties are generally listed at fair market value.

Are you interested in checking out REO properties in Denver? Contact Metrowest today – we specialize in these types of sales and would love to help you start the process!

Ken Blevins

About Ken Blevins

Ken Blevins, CEO of Metrowest Real Estate Services, is a veteran in mortgage and default servicing with more than 24 years of experience in collections, foreclosure/bankruptcy, loss mitigation and real estate disposition (REO). Blevins was an original co-founder of Metrowest in 2003, a Real Estate Brokerage and Services Company focused on the resale, recovery and liquidation of distressed real estate in Denver, Colorado and surrounding metros. Blevins assumed the role of CEO in January 2014 and provides strategic direction and has management accountability for the day-to-day operations. Under his direction, Blevins drives all default management operations to maximize asset value recovery and reduce loss severity through a strategy focused on customer service and state of the art technology. Blevins has 18 years of direct operational experience in all facets of REO Asset Management having managed large national REO Disposition contracts for Fannie Mae, Freddie Mac, Wells Fargo, JP Morgan Chase, CitiFinancial, GMAC Mortgage and other various financial institutions. Blevins specialties include REO asset management, real estate investment, bulk REO acquisitions and distressed asset recovery and liquidation, and he has directed the resolution and liquidation of over ten billion in institutionally-owned residential real estate.

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