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What Does REO Stand For
Real estate investing comes with a lot of different terms. When you are just starting everything can seem confusing. One term that you hear many times is REO. What does REO stand for? The actual letters stand for Real Estate Owned. That doesn't help much - still confusing. An REO is real estate that the bank now owns.
What else does REO stand for? If you're into investments, it can stand for a chance to make some money. Or at least get a house for cheap.
An REO is a property that was foreclosed on. The house went to auction but there was no successful bidder so the bank now owns the property. Keep in mind that banks are not in the real estate business so if you come to them with a good deal, they will accept it because they want to get rid of the property as soon as possible. They will even lose money on the deal now because they know the longer they keep it, the more money they are losing.
REOs can be good property investments but you need to do some research just like when looking at foreclosures. What does REO stand for? A chance to get a good deal on some investment property. One good thing about working with REOs is that the deal might go a little smoother. You have a better opportunity to inspect an REO property. You are also working directly with the bank, which is a very motivated seller and will entertain all reasonable offers.
Before you get too excited about a property, find out why there were no successful bidders at the auction. The most common reasons why no one bid on the property are that there are IRS liens on the property, the property was in bad condition or there is not much equity. Once a property becomes an REO property it becomes a better investment. The bank will be willing to accept a lower offer than would be accepted at the auction. Many REOs can sell for 30% below market value.