What is an REO? When a homeowner doesn't make their mortgage payments, the lender forecloses on the property and auctions it off. If no one buys the home at the foreclosure auction, then the bank still owns the property and wants to get rid of it as quickly as possible. This is an REO, which stands for "real estate owned." The name comes from a category on the bank's list of assets. REOs are also known as bank-owned properties or lender-owned properties.
Banks don't want to build their own real estate empires. They want to get rid of these properties quickly, because when banks' money is tied up in real estate they can't use it for lending or other kinds of investing, which is their primary business. Since banks want to sell these homes quickly, REOs are often listed well below their appraised value. Banks also reduce the price of REOs because they often need significant maintenance. It's human nature that when you realize something is about to be taken away from you that you stop taking care of it. And on top of that these homes have usually been vacant for months after the residents' neglect. If you're considering buying an REO home, it's smart to take a contractor with you who can give you an estimate of how much it will cost to remodel the home, so you can figure that into the price.
At present, there are seven REOs available in Pasadena. And there are some great deals out there too. There's one with four bedrooms for $389,900 and another with 2 bedrooms for $294,300. And these are houses not condos or townhomes. If you want to get more info, we send out a Pasadena REO Hot List that's updated daily that comes straight to your inbox. You can even customize it according to price, number of bedrooms, or neighborhood.
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Near my home in Pasadena, there is a home that was foreclosed and vacant for months. The grass was two feet high. A few windows were broken; a few boarded up. It had that haunted house kind of feel to it that made you walk a little quicker down the side walk. But eventually someone did buy it and moved in. In a short time, the house looked beautiful. When I saw it I wondered if it was the same house or whether I got mixed up on which block I was on. My point is that while REOs can require significant investment of time and money to restore, it's a gift to the neighborhood to do it.
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