Action to REO

6 Replies

Hi all-

I am just trying to understand the REO market better.

When does an auction that is in foreclosure property become an REO property?

Thanks

@Chris Viola : A property becomes an REO (Real Estate Owned) when it does not sale at auction and the ownership is retained by the bank. Are these properties you're looking to invest in?

How long does it remain at auction? I was reviewing comments on Auction.com and saw that a complaint about the process is that the same properties continue to go to auction until the reserve price is met. At what point is the bank convinced that it won't get sold at the auction price they reserve or do they just take it back and offer it in the future?

To answer your question, yes, I like REOs because it seems like they are free and clear of outstanding liens etc. and are safer (less risk) than properties that are pre-REO. Is that a right understanding and if so, why would anyone buy a pre-REO property? Are the deals that great?

Thanks

@Xavier Randall

How long does it remain at auction? I was reviewing comments on Auction.com and saw that a complaint about the process is that the same properties continue to go to auction until the reserve price is met. At what point is the bank convinced that it won't get sold at the auction price they reserve or do they just take it back and offer it in the future?

To answer your question, yes, I like REOs because it seems like they are free and clear of outstanding liens etc. and are safer (less risk) than properties that are pre-REO. Is that a right understanding and if so, why would anyone buy a pre-REO property? Are the deals that great?

Thanks

Originally posted by @Chris Viola:

@Xavier Randall: How long does it remain at auction? I was reviewing comments on Auction.com and saw that a complaint about the process is that the same properties continue to go to auction until the reserve price is met. At what point is the bank convinced that it won't get sold at the auction price they reserve or do they just take it back and offer it in the future?

To answer your question, yes, I like REOs because it seems like they are free and clear of outstanding liens etc. and are safer (less risk) than properties that are pre-REO. Is that a right understanding and if so, why would anyone buy a pre-REO property? Are the deals that great?

Thanks

Homes on Auction.com/ homesearch.com and Hubzu are not "foreclosure" auctions. These homes have already been repossessed by the bank. 

These homes will keep rolling over time after time on the websites because the bank's reserve price has not been met. They do not make this information public. Each time an "auction" on one of these sites passes with no winner bidders- the bank is possibly lowering the reserve although in some cases they pop it back on at a higher price. I've seen all types of things happen on these sites. Just know where your numbers are and account for all the fees when bidding.

@Chris Viola -

@Lisa Kohl is on the money. The whole structure of the foreclosure sale and what is a clear REO has changed. Also...READ THOSE AUCTION CONTRACTS VERY CLOSELY!! A lot of the properties are being offered AS-IS, WHERE IS. Even though you may get a clear title and lot of times you may still outstanding municipality violations or issues. Also...here's another tid bit...companies like Homevestors, Econohomes & other big companies who offer discounted homes to the individual investors like yourself buy properties from these same auction houses in bulk.

Now...if you can negotiate a short sale on an isolated property then you don't have as much bidding competition (maybe, sometimes). I'd like to talk more. I'm local in Long Beach. Contact me directly.

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