Real Estate Owned (REO)
What Is Real Estate Owned (REO)?
Real estate owned (REO) is property owned by a lender, for example, a bank, that has not been effectively sold at a foreclosure auction. A lender — frequently a bank or semi governmental substance like Fannie Mae or Freddie Mac — takes ownership of a dispossessed property when it neglects to sell at the amount looked to cover the loan.
Understanding Real Estate Owned (REO) Properties
At the point when a borrower defaults on their mortgage, the pre-foreclosure period frequently involves either a real estate short sale or a public auction. If neither goes through, the foreclosure cycle can end with the lender — a bank, for instance — taking ownership of the property. Banks might endeavor to sell REO properties in their portfolios without the assistance of real estate agents. At the point when this is the case, banks frequently list their REO properties on their sites. A bank's loan officers may likewise tell customers looking for homes about the REO properties in its portfolio.
REO Specialists
A bank's REO specialist deals with its REO properties by marketing the properties, reviewing any offers, preparing normal reports on the situation with properties in the bank's portfolio, and tracking down deeds. The REO specialist likewise works closely with the bank's in-house or contracted property manager to guarantee properties are secure and winterized or to prepare a property for vacancy. The REO specialist attempts these job capabilities to assist the bank with liquidating its properties rapidly and effectively.
REO Properties and Real Estate Agents
To give REO properties the vastest exposure, REO specialists frequently contract the services of nearby real estate agents to list the properties in the [multiple listing service (MLS)](/different listing-service-mls). Listing REO properties in the MLS guarantees that interested real estate searchers using sites like Zillow, Realtor.com, Redfin, and Trulia — as well as neighborhood real estate sites — will see the listings. A REO property's listing agent brings any offers they receive to the REO specialist. Real estate agents arrange the commission they will receive for selling REO properties with the REO specialist.
To assist with ensuring a smooth closing, purchasers ought to likewise look through public records to guarantee that all liens associated with a property have been paid.
Benefits and Disadvantages of a REO Property
REO properties can be alluring to real estate investors and homebuyers since banks may, at times, sell them at a discount to their market value since selling such properties isn't commonly their essential business line. In any case, banks normally sell REO properties "with no guarantees," meaning the bank won't make any repairs prior to selling. These properties are many times in deterioration, so it's vital to have a careful inspection and be prepared to make (and pay for) fundamental renovations.
Features
- REOs are frequently sold at a discount by banks and different lenders. Notwithstanding, they are typically sold "with no guarantees" and are many times in deterioration.
- Banks endeavor to sell their REOs using a real estate agent or by listing the properties online.
- Real estate owned (REO) is the term for a property owned by a lender since it failed to sell in a foreclosure auction after the borrower defaulted on their mortgage.
