What is an REO? REO means Real Estate Owned. Everyone is talking about REOs these days. But before you consider buying one, there are a few things you should know about REOs. These properties are generally owned by banks, credit unions, mortgage companies and sometimes private companies.

News and reports about foreclosed properties are becoming common nowadays and the opportunity to market REO are increasing dramatically. Almost everyone is trying to get their hand on an REO and tries selling them.

Owning an REO is a good opportunity as you get to save much as compared to buying non-REO property. However, in today’s market where the number of such properties dramatically increases, you may not always get the property lower than the current market value.

The REO owner is not allowed to make a profit after the foreclosure process. So buyers are more likely to get lower price during the pre-foreclosure stage.

This time can vary from state to state. The process of the bank taking possession of a property is known as foreclosure. A foreclosure property is put up for sale in an auction known as a Public Sale. If the property does not sell or is selling for too low the bank will bid on it and keep possession of the property.

After the foreclosure process, the property becomes an REO and the lender, mostly banks, take hold of this. Since banks are not in the business of selling properties, they would likely want to sell the property a lot sooner.

Before making the final offer to purchase an REO, it’s needed to hire a qualified home inspector who can guide and give an assessment as to the costs of repair or rehabilitation needed for some section of the property. You may negotiate for these cost to be deducted from the property’s purchase price.

One way to purchase REO’s is through private real estate investors. These people buy REO’s at wholesale pricing and get’s discount for doing so. These discounts can be passed on to you if you decide to purchase the property through them.