Some Truths about REOs

Real Estate Sales Representative with Fieldstone Real Estate

Despite the fact that most people, practioners and consumers alike, are now familiar with the term REO, some myths still remain. Here, I'll address a couple that I seem to be hearing every day.

But, first, for those that don't know, REO stands for Real Estate Owned. This generally refers to properties which have been foreclosed upon and which are now owned by the bank. In today's market, these properties are being marketed in large numbers, and consume about half of the available inventory in many areas. So, before you enter the buying game, there are a couple of myths you should better understand.

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Michael A. Caruso
Surterre Properties - Laguna Niguel, CA

Hi Vicky,

Nice post, and I also enjoyed reading your Real Estate Whisperer.  Have a great week.  Michael A. Caruso

Jun 30, 2008 05:47 AM #1
Bruce Forge
Bruce Forge Real Estate - Santa Ana, CA

Hello Vicky,

I did as you suggested and read your excellent posts.  Markets tend to be what we make of them, as you know.  I agree with your general points that lenders have a duty to treat the shareholders fairly.  However, we also know that doesn't always happen.  Countrywide and Wamu come to mind.

Another reality is the FDIC.  When a bank has too many non-performing assets, the bank may suddenly be not-a-bank any more.  While depositors have some protection up to the FDIC limits, the shareholders have none.  The FDIC is already adding staff for the defaults they expect.

It is not too likely that the matter is concluded yet and will not be finished until sometime in 2010.  By then the reset ARMS and the subprime issues should be mostly history.  We will have been through the biggest explosion of foreclosures in history with the largest number of those becoming REO properties in history.  Currently this is an accelerating problem, especially in California.  It will be different in different states, of course.  Perhaps in Virginia you will get through all this sooneer than we on the coast.

In any case, one does need to kiss a lot of frogs to find a prince and your comments on knowing what one is buying is always of importance.

Thank you for you comments on my site.

Jun 30, 2008 02:59 PM #2
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