REO stands for Real Estate Owned, referring to property that has been foreclosed upon. That means that the lender,bank or government agency, has taken possession of the property and the title and has the right to sell it.
After a repossession from which the property becomes classified as REO, the beneficiary will go through the process of trying to sell the property on its own or obtain the service of an REO Asset Manager. The beneficiary will remove the liens and other debts on the home and try to resell it to the public, either through future auctions, direct marketing through a real estate broker, or by itself. The asset manager may also try to contact REO realtors (that’s me) that specialize in certain ZIP codes to help sell this bank owned property. Real estate investors will often purchase these properties because of discounts offered to compensate for the condition of the property.
Bank REO properties are generally in poor condition and need repairs and maintenance, both to satisfy property upkeep laws and to preserve and prepare the property for sale. As an REO Realtor services include: securing a property (changing locks, boarding up), debris removal, property maintenance (winterizing, cutting grass, repairing or tarping roof leaks), and rehabilitation. In addition to preventing damage to the property, securing a property is used to prevent or discourage re-entry by former occupants or by squatters, which can both damage the property and require legal proceedings to remove.
REO are generally gobbled up by investors who can then hire an REO Realtor and resell the property for a profit. For the home buyer this can mean super savings on a home. These homes are usually sold for less than average prices. So while you are out house hunting take a look at some of these properties and see what a super home buying opportunity an REO property can be!