REO stands for “Real Estate Owned”.  These are properties that have gone through foreclosure, which means the previous owners were not able to keep paying for them and are now owned by the bank or mortgage company. The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a clear title to the buyer at closing. All REO properties are sold “AS-IS” so the buyer is responsible for any repairs needed as well as city or county code violations.

REO properties come in all types of shapes, sizes and conditions, some better than others, so it all depends on the individual property as well as the individual buyer. While some REOs are move-in-ready and might even be FHA/VA approved (see our Financing section), others are in poor shape and need to be repaired before any one can move in. These are generally bought by investors or contractors who can either do the work them-selves or have minimal repairs done and rent them out. So it all comes down to how much or little money or work you want to put into the property after you buy it.

Contact one of our Realtor associates so that he or she can draw up a contract for you and guide you in the purchase process. Most banks sell REO properties “AS-IS”, so you can include an inspection contingency or condition in your offer that gives you time to check for hidden damages and withdraw the offer before that period is over. The inspection is for you to determine how much money you will need to repair the property, not as much to negotiate, as in most instances the seller is aware of the condition of the asset. In most cases you will need a pre-approval letter from a lender or proof of funds if making a cash offer.  After you’ve made your offer, you can expect the bank to make a counter offer.  Then it will be up to you to decide whether to accept their counter or counter back.  Realize, you’ll be dealing with a process that probably involves multiple people at the bank, and they don’t work evenings or weekends.  It’s not unusual for the process of offers and counter offers to take days or even weeks, and if there are multiple offers from other buyers, it may be delayed even more.