REO Process

4 Replies

We are just learning about REO properties and I have a general question about the process. I see homes in 'pre-foreclosure' and have seen a couple listed at the local Sheriff's weekly sale where the bank keeps them generally by bidding. It seems very difficult to try to reach the mortgage company to try to talk with someone about the property and I'm not sure if that would be fruitful of not if I did. What is the best way to try to acquire the property before what looks like the final stage of 'Action'... during the earlier stages such as 'pre-foreclosure'?

Thank you for any suggestions.


I can't answer the general question but I can tell you the bank will not negotiate with you pre-foreclosure because they can't.  They don't own the property then.  They will own it if/when they're the winning bidder at the auction.

@Alan Day - I would suggest reading the linked blog post for a better general understanding of the REO process.

Acquiring assets before full foreclosure has been initiated is the focus of many wholesalers and flippers. Many of the techniques they use, driving for dollars, mailing campaigns, bandit signs, are your best bet for identifying and contacting owners of properties that are going underwater and may be looking for a way out.

Buy the deed from the owner and reinstate the loan. If you need to get info from the bank try getting Power of Attorney for that property only. This gives you the legal right to get info from the bank. Best thing is to contact the Loss Mitigatory of the bank. 

@Alan Day

Sheriff sales, which are local and ran by the county's sheriff office of where the property is located stem from defaulted property taxes -- Bank pre-foreclosures aka short sales stem from defaulted mortgage payments.  There are different. Many sheriff sales get 'stayed' if the homeowner is working towards making the payments. Its a bit more difficult for the homeowner to cancel the short-sale process even if they have somehow come up with the full amount including penalties and fees...

To get involved in on bidding for the sheriff sale properties is pretty easy for the most part just show up with a cashier's check equal to 10% or 15% of the bid that you want to purchase. For specifics go to that county's sheriff website, call or stop by the office for rules and how to participate.

To put an offer in on a short-sale you will need a r.e. agent that's well versed in the process to best serve you. Often the mortgagor has already vacated the premises, though sometimes they are still there. No matter what the homeowner agrees for the price to purchase, the bank has to ok (for it to be accepted) or nay it(and it will be denied). Big banks mainly only deal with r.e. agents regarding REOs / OREOs. 



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