What does REO stand for? An REO is a property that was foreclosed on. For whatever reason, there were no bidders at the foreclosure auction so the bank now owns the property. Banks are not in the real estate business so 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 so that you know what your getting. this is why there is a due diligence period where you research the property to make sure that it is something that you want to purchase.

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.

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.

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.

Some banks bundle their portfolios and sell them to large buying pools of investors looking to purchase these properties and resell them to other buying groups in the market.

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