I like this simple explanation of REO, as we're seeing so many of them these days. If you're in the market for an REO property in Philly, call Suzanne.
But if you're looking for an REO home on Maui, you should contact me, an eperienced Maui REALTOR®
This question is presented to me enough times that a blog answer is in order.
REO stands for Real Estate Owned and refers to a bank owned property that has failed to sell at a foreclosure auction or trustee sale.
The truth is most foreclosure auctions actually turn out to not draw any bidders at all. This is because the owner of the property typically owes more to the lender than the total market value of the property, and this poses a major barrier to a successful sale.
This makes sense, considering that if there were enough equity in the property to cover the loan, the owner would have likely sold it and paid off the bank, avoiding the need for a foreclosure.
After a property fails to sell at a foreclosure auction, its title is reclaimed by the mortgage company, and it officially becomes an REO property.
Once the financial institution takes ownership of the property, the mortgage loan ceases to exist, and the residents are usually evicted. The bank will
handle any outstanding items owed by the prior borrower, such as homeowner’s association fees, and will negotiate with the IRS for removal of any tax liens against the property.
They may also decide to make any necessary repairs in order to attract potential buyers. If you are interested in REO properties in the Philadelphia PA area, give me a call.