What is a REO Home Sale?
REO House
March 10, 2008
REO is a real estate term which means “real estate owned”. The real estate is owned by bank or lender, typically as a result of foreclosure. When a bank lends you money to purchase a house, the home is collateral for the loan which means if you don’t make your payments the bank has the right to take ownership of the property. Mind you, this is not property the bank wanted or wants to keep, it is a drag on their balance sheet and ties up money that could be used for other loans.
Once a bank owns the home they want to sell it a quickly as possible. This does not mean a fire sale but often the prices are slightly under market price. The banks will use a professional appraiser and a couple of real estate brokers to help determine market price. The bank is not legally required to complete the usual disclosure documents because typically they don’t have enough information, though they still must disclose what they do know. For buyer’s this means the home is purchase “as is” so it is especially important to get good inspections.
Warren Carreiro, Broker Marin County Real Estate Homes You Love. Advice You Trust TM http://www.realtyofmarin.com/ Warren@RealtyOfMarin.com
July 26th, 2008 at 3:23 pm
[...] I recently closed escrow on a three bedroom home in San Rafael for $599,000. At the peak of the market in 2005 this home would have sold for well over $700,000. In 2005 loans were too easy to obtain and buyers, with 100% financing were playing with funny money and many were more concerned with monthly payment than amount paid. This resulted in some buyers paying the absolute top dollar for a home and we are seeing some of those homes selling for much less today, often as a short sale or REO. [...]
August 4th, 2008 at 12:39 pm
[...] What happens to these homes when they fall out of escrow? Some go back on the market to give it another go but many are taken back by the bank and sold as bank owned property (REO). [...]
August 6th, 2008 at 10:29 am
[...] does not work for most of us but the next best thing is post foreclosure, bank owned property (REO – real estate owned by the bank). Once a bank takes a home back they want to sell it quickly because they are in the business of [...]