It’s pretty obvious why some investors/homebuyers might be interested in real estate owned properties. When ownership is transferred to the lender, the property reaches REO status and is officially real estate owned.įoreclosures aren’t fun for anyone involved, but there is a bright side to everything smart real estate investors just need to know how to act on this potential opportunity.

Sometimes the property doesn’t sell to a third-party or the lender ends up being the highest bidder (banks can credit bid as high as the total outstanding loan balance plus foreclosure fees).

If a third-party is the highest bidder, they must pay in cash or a cash equivalent, and the title to the property is transferred to them, while the bank recoups a fraction of the cost of the outstanding loan balance.

It is sold to the highest bidder, whether that be a third-party or the bank itself. Once the property is officially foreclosed on, it goes up for sale in a real estate auction.The lender must take legal action, and starts the foreclosure process.First, the borrower (homeowner) defaults on their mortgage payments for a period of time, accumulating a high level of debt.Foreclosures are typically the last resort so there are multiple steps before a property with a defaulted mortgage becomes real estate owned. When a real estate property is secured by a mortgage, and the borrower doesn’t make the mortgage payments, it can eventually be repossessed by the lending bank. It’s a term often used to describe foreclosures.

“Real estate owned.” An REO property is one that has had its ownership transferred to the bank or another lender. Let’s start by explaining exactly what it means for a property to be REO occupied. But if you want to get it right, you need to understand exactly what you’re getting into. Investing in something like an REO occupied property could be a great opportunity. A big sector in the market that is often overlooked by real estate investors is bank owned properties.

What does owner occupier mean