"REO" stands for Real Estate Owned. These are properties which have gone through foreclosure and are presently owned by the bank or mortgage company. This is not the same as a property up for foreclosure auction. 
When buying a property during a foreclosure sale, you could pay up to the loan balance plus any interest and other fees added during the foreclosure process. You must also be willing to pay with cash in hand. To top everything off, you'll get the property totally as is. This will include existing association and tax liens, city liens, county liens, and code violations. If that doesn't sound like enough, you may have to evict the current residents!
A bank-owned property, on the other hand, is a more tidy and attractive deal. The REO property did not find a buyer during foreclosure auction. The lender now owns it. The lender will see to the removal of tax liens, evict occupants if needed and generally organize for the issuance of a title insurance policy to the buyer at closing.
Take notice that REOs may be exempt from typical disclosure requirements. For instance, in Florida, banks do not offer a Property Disclosure, a document that ordinarily requires sellers to tell you about any defects they are aware of. By hiring United Realty Group, you can rest assured knowing all parties are fulfilling Florida state disclosure requirements.
Is REO property in South Florida a bargain?
It is occasionally assumed that any foreclosure must be a good deal and a chance for easy money. This isn't always true. You have to be very careful about buying a REO if your intent is profit from the sale. Even though the bank is typically anxious to sell it promptly, they are also looking to get as much as they can for it.
When considering what to pay for REO property, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale. The bargains with money making potential exist, and many people do very well buying and selling foreclosures. But there are also many REOs that are not good buys and may not be money makers.
Ready to make an offer?
Most mortgage companies have staff dedicated to REO that we work with in buying REO property.
Before making your offer, you'll want to contact us to find out as much as you can about the condition of the property and what the bank's process is for making offers. Since banks most commonly sell REO properties "as is", you may want to include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it. If you can provide documentation demonstrating your ability to secure financing, such as a pre-approval letter from a lender, your offer will be more attractive and likely be accepted. (This is generally true for any real estate offer.)
If we receive a counter offer, it will be your decision whether to accept their counter, or offer a counter to the counter offer. Your deal could be settled in a single day, but that's usually not the case. Since offers and counter offers usually give the other party a day or longer to respond (and employees at a bank don't work nights or weekends) you could be looking at a week or longer. We are used to working around the schedules of this type of seller and will do everything possible to ensure there are no unnecessary delays.
