What Is Real Estate Owned (REO)
REO is a term for a property owned by a lender or by a bank that took ownership through foreclosure proceedings. REOs are often sold at a discount by banks and other lenders.
If a home is owned by HUD, it is known as a HUD Home.
How Does a Property Become Real Estate Owned?
Property must go through a process before it can become real estate owned.
1) The borrower goes into default
2) If the lender cannot negotiate repayment of the mortgage, the lender can repossess the property
3) If the property has not been successfully sold at a foreclosure auction, it becomes part of the lender's inventory
Advantages & Disadvantages
Advantages - Often priced low, no outstanding taxes, no homeowners to deal with
Disadvantages - Often sold in "as is" condition and can require expensive repairs and could have other hidden cost
