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What Does REO Mean?

You may have heard the term REO used more often lately on the news or in conjunction with real estate.

REO is an acronym for Real-Estate-Owned. Most REO’s are owned by a lender at a result of a foreclosure on a property. Lenders refer to these properties as REO since that is how the asset is defined on their books. A bank owned property is an REO. A short sale is Not an REO.

Note: Not all REO’s are foreclosures. REO can also refer to Real Estate Owned by an individual, LLC, or corporation.

Bank Owned notice on door

REO Home

Many investors think REO’s are synonymous with “cheap.” That is usually not the case. There used to be a time when you could get these properties relatively cheap compared to the market, but now the banks are looking to recover more money on these REO properties after all the expenses incurred from going through the foreclosure process. Lenders that take a property through foreclosure today have solid exit strategies and know what the property is worth way before they take it over.

If you want to purchase REO’s, your best strategy is to study the comparable sales (we always provide this data to our clients) and construct your offer based upon the combination of what the data supports and the value to you personally. In fact, this buyer strategy applies to all real estate offers, not just REO properties.

Also keep in mind that unless you’re strictly an investor focusing on foreclosures you should not limit yourself. First and foremost, you should work with your Realtor to focus on a location you want to live. Then, if there are foreclosures in that area, by all means you should consider REO homes in your overall purchase plan.

We have a complete list of all Naples foreclosures that is updated throughout the day.

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