It is important when searching for a home to know that there is always a reason why a property went "REO". The first question I ask myself is "Why did these people just walk away from this home?"
Many times the answer is obvious. The owners lost their job, or an illness, or divorce. Other times the answer is subtle. The property is on a busy corner, or there is commercial in close proximity. When this is the case the owners make an "executive decision" to vacate, as the overall neighborhood is declining in value.
We are witnessing this in communities throughout the U.S. right now. Recently there was a front page article about a tract in Denver just south of the airport area. Blocks of homes are in foreclosure. Where people have little or no equity and have to pay a mortgage, property taxes and insurance, they cannot justify the expense, so they pack up and vacate. These same folks then rent in the same neighborhood for 50% of what they were paying for home ownership down the street. Example: Rent is $1,100, where principal is $1,860, property tax $240, insurance $95, and equals $2,195!
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