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Real Estate Owned: What Is It All About?

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By : Roby Hicks    99 or more times read
Understanding what real estate owned or REO is, will help us understand the processes involved in the real estate industry. This will also help us familiarize the different options available in terms of home ownership. For starters, what is REO and how is it different from foreclosure?

REO occurs when a foreclosed property did not sell in a foreclosure auction. There are several reasons why this can happen. One is that the property may not be appealing to buyers. This can happen especially since properties are sold as is. Another reason why this could happen is that the minimum bid for the property is higher than the actual value of the auctioned home. Nobody would want to purchase an overpriced property right. However, the lenders need to do this because they want to recover the balance of the mortgage as well as cover the expenses incurred while foreclosing the property. This includes payment for the lawyer and processing fees undertaken.

How is this different from foreclosure?

A foreclosure is different from REO in the sense that foreclosure precedes REO. Foreclosure takes place when a property owner fails to make his monthly mortgage. The lender sends demands letters and if all else fails, the property will be foreclosed. In REO on the other hand, the lender repossesses the property when it fails to sell in the foreclosure auction.

How to purchase REO?

Many find it beneficial to purchase REO rather than participate in an auction. This is because an REO purchase will have cheaper prices as the mortgage balance and other expenses will no longer be considered. The value of the property will be identified by an appraiser. This means that the buyer will pay for the actual value of the property. In addition to that, the buyer will be allowed to check the property before actually purchasing it. This means that a homebuyer will have a glimpse of the property he or she will buy and decide whether to continue the purchase or not.

Since it is difficult to sell a property in this type of market, expect the mortgage company to make certain changes on the REO. Repairs will be made to make it more attractive to buyers. In addition to that, they will handle the eviction, should the need arises.

Purchasing an REO is like purchasing a regular hoe. Finding one today should be easier than finding them in the past. lenders today are more open to giving list of their inventories to real estate sites and agents. This way, more people have access to them. When planning to buy one, always consider the neighborhood first. Is it safe and ideal for you? Is it accessible? In addition to that, you have to check the property thoroughly to ensure that you get what you paid for. Bear in mind that there are a lot of properties sold in the market today. You do not have to settle for less.

Understanding REO offers a lot of benefits. It makes you understand how the real estate process works. It also gives you an option when considering purchasing a property.
Check out the Del Mar CA View Property. Visit the Del Mar CA Real Estate near Water and the Residential Real Estate in 92130 as well.

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