What does REO mean?
REO (Real Estate Owned) refers to a property that has been foreclosed on and repossessed by the lender for non-payment of mortgage by the previous owner. Unlike foreclosures, which are typically sold at auction, REO’s are sold like a normal home on the market with REALTOR® representation. They are often priced as low as 20% below market value to sell quick, as most lenders do not want to keep property on their books — they are in the business of making money on loans and aren’t usually equipped to actively manage a real-estate portfolio.
Here is a steal in Hawaii Kai (MLS# 1011164), Â listed at $1.28M (20% below last sale price and the current tax assessed value.)
REO in Hawaii Kai, Oahu (MLS# 1011164)
How are these REO’s different from or better than traditional foreclosures, you ask? For one, there are usually far less risks to a potential buyer in an REO transaction, making it an especially popular option with first-time buyers and investors that want to minimize risk. The key point is that the lender has already “repossessed” the property and not just foreclosed on it. The tenant/owner has vacated the premises or been lawfully evicted, which means the new buyer can avoid the complication of and legal costs associated with evictions.
Other benefits can include: a “clean” title and transfer to the new owner (no back-taxes or liens), freedom to inspect the entire property prior to purchase, the ability to negotiate for seller paid expenses and repairs, and the ability to get a mortgage for the purchase with a low down payment instead of having to pay certified funds up-front to an auctioneer.
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