Real Estate Owned (REO) is a term frequently used by lending institutions as applied to ownership of real property acquired for investment or as a result of foreclosure.

If a property is real estate owned, the bank will then go through the process of trying to sell the property on its own. It will try to remove some of the liens and other expenses on the home, and then try to sell it through the use of real estate agents. Real estate investors will often go after these properties as banks are not in the business of owning homes and, in some cases, the home can be bought at a discount to its market value.

REO properties are transacted much different than a typical retail sale. The Seller (or the bank) calls all the shots and the offer is negotiated with an asset manager.

Avoid writing significantly low or questionable offers. We understand every buyer’s desire to get a great deal but unless you can document why the seller should take significantly less than the asking price, don’t bother. They already know what the property is worth and what is needed. Be assured they have done their homework.

An offer will not be considered with out a pre approval letter. So, get with a lender and get yourself pre approved. It will make your offer more appealing because on of the biggest concerns is whether the offer will close.

Banks want fast transactions. So, contingencies should be removed fairly quickly. So, any inspections will need to be ordered extremely quickly. REO’s are sold “As is” and it any repairs are highly unlikely.

This information is intended to be a guide to help with understanding the REO process. It is impossible to address every possible situation and a Realtor is recommended to guide you through the process. Please email if you have any specific questions.

Patrick