An REO is real estate owned by the bank. A bank REO is different from a foreclosure property in that the bank has already tried to sell it at a foreclosure auction and has been unable to receive any bids. As a result, the bank then becomes the owner of the property. Naturally, the bank does not want to keep the REO any longer than necessary which is where the great opportunity arises for you, the Investor. Obviously, not every REO is going to be a good deal, but with the proper research there are many excellent deals to be acquired.

Now may be a great time to buy bank owned properties. These are real estate properties that the banks have foreclosed on and are losing money on. A property that a bank holds is referred to as a bank R.E.O.

Banks incur expenses in holding the properties and they would prefer selling these properties as quickly as possible to help them prevent future losses.

Banks are in the business of lending money not selling properties. Banks incur expenses maintaining the properties and would like to get these properties off their hand as quickly as possible.

Banks are willing to give the property below the current market value just to help them from incurring additional expenses in keeping these properties.

It’s good to buy an REO property. You can be sure that the property you’re buying has a clean title and would not cause you any trouble later on.

Bear in mind to always inspect government and bank owned REO’s they are subject to vandalism, particularly if they have not been occupied for a while and this could mean that major repairs are required. These homes are for sale “as-is” so always ensure that a “subject to inspection” clause is clearly defined in any offer to the bank, if you have not yet managed to inspect the property, this small clause will save you a great deal of trouble in the future.

For a buyer, an REO is a much safer bet. You are able to inspect the property yourself, and decide if the costs involved with getting the home in salable condition is worth it. If you are going to purchase REO homes for sale, make sure that your negotiation techniques are tight. Be prepared to swap offers and counter offers.