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REO properties: What Are They?

By
Real Estate Agent with Realnet Tampa Bay

You have probably heard of REO properties, but do you know exactly what they are? Simply put, they are properties that were foreclosed upon, didn’t sell at public auction and were subsequently returned to the bank. REO properties aren’t always just houses; any property, including multiple rental units, commercial buildings and vacant land can be reclaimed by the bank.

Investors can often find REO properties listed on a bank’s website; however, you have to negotiate with a loss mitigator in order to make a purpose. Once you contact the loss mitigator and set up an appointment to view the investment property, you will work directly with that person if you decide to make an offer.

Unlike other types of investment property for sale, when dealing with a loss mitigator at a bank, the process can take a while. No matter how good of a relationship you have with him or her, it’s very unlikely that your first offer on the REO property will be accepted. Remember that the bank has already lost money on the property, and their goal isn’t only to get rid of the property, it’s also to make a profit.

Purchasing REO properties directly from a bank can be a huge hassle. Many would be investors choose to buy them from private investors. Sometimes going this route can not only be a much simpler process, but can also be a less expensive path. You would have to find someone who deals in purchasing bank portfolios in bulk (which means they get the properties at wholesale prices). Because they have the advantage of purchasing wholesale properties, you can often get an excellent deal, sometimes as low as 30% under the property’s market value.

Unfortunately, when people find out their house is going to be foreclosed on, they often destroy the property, or at least do significant damage. For this reason, REO properties often need repairs and sometimes even some remodeling; therefore, it’s definitely helpful if you can get the desired property through an independent investor and save that 30%.

Of course, you also don’t have any support by choosing this method. After all, the independent investor has his own interests at heart. Luckily, Realnet has a staff of experienced agents that can help your REO property purchase easy as pie! We have experts on REO propertiesshort sales and Florida foreclosures.

Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Greg, good explanation of what an REO is and the buying process. Working with an expert like yourself will definitely make it an easier process. Good Post!

Apr 26, 2012 10:37 PM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

It can work and I highly recommend the services of a pro when dabbling on this subject...good post

Apr 27, 2012 12:35 AM
Sandy Acevedo
951-290-8588 - Chino Hills, CA
RE/MAX Masters, Inland Empire Homes for Sale

Hi Greg, this is good introductory information for the public who really do not understand the process.

Apr 27, 2012 01:20 AM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Greg - It's important to have a professional help you through the intricacies of purchasing an REO.

Apr 27, 2012 12:04 PM
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA


Greg:

It is good to know that not every agent can or is able to help investors ferret out the foreclosed upon properties that a buyer may want to buy. 

Apr 27, 2012 02:26 PM
Frank Laisch
Orlando, FL
"The Insurance Guy"

Greg, Excellent overview on REO properties, many consumers don't understand some of the acronyms. Congrats on your featured post

Apr 27, 2012 08:10 PM