What Is Bank Owned REO?
REO stands for "real estate owned" and simply refers to real estate owned by a financial institution. REO properties are post-foreclosure homes that banks were not able to sell immediately following the foreclosure process. REO homes are a financial liability for banks.
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Facts
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Once a bank legally seizes an individual's home through foreclosure, it will immediately attempt to sell the home at a foreclosure auction. The bank's goal is to recover as much of the unpaid mortgage loan as possible. If no one bids on the property or if the bids received are unacceptable, the mortgage title reverts back to the bank, and the home becomes an REO property.
Features
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Banks market REO properties in much the same way as traditional sellers market their homes--through real estate agencies. Some banks will also maintain listings of their REO properties on their websites.
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Benefits
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As long as a lender maintains ownership of a foreclosure, it is responsible for paying the property taxes and maintenance on the home. Thus, the longer the property sits on the market, the more money the bank loses. Because of this, buyers can often purchase REO properties at a considerable discount.
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