Real Estate Own (REO) Process For Buyers
What Is Real Estate Own (REO)
REO is a term for a property owned by a lender or by a bank who took ownership through foreclosure proceedings. REOs are often sold at a discount by banks and other lenders.
HUD Homes (REO)
A HUD home is a 1- to 4-unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.
Get Pre-approved for Financing
Financing a REO property financing a traditional home purchase with a mortgage. Here are some examples of different ways to get financing: Conventional mortgage, FHA Loans, Home Equity Loan, Renovation Loan and Hard Money Loan.
Find REO Properties
Most REO properties can be found on multiple listing service (MLS), checking lender's online listings, or other sites like Trulia and Zillow or ask a real estate agent.
Get A Home Inspection
REO homes are typically exempt from disclosures. A home inspection is a crucial step to take when considering buying an REO. Typically an REO property is sold "as-is," meaning anyone who purchases the property will be responsible for any further repairs. The inspection will uncover any hidden issues.
Closing
During this step, closing is subject to the bank's approval. The bank will determine if there are any liens listed on the statement that the bank will not pay and also whether any relocation assistants will be paid to occupants.
Working with a realtor who specializes in REO properties can help guild you through this process.
Is an REO Property Right For You?
Are you willing to take risk because there are no disclosures. Some people get lucky and get a discount based on condition or less competition.
Advantages & Disadvantages
Advantages - Lenders are motivated to sell
Disadvantages - Often sold in "as is" and can may require repairs
