Newbie!! Foreclosure and REO

4 Replies

If a home has been foreclosed by the bank, is that considered a REO property? Will the property be sold at property value?

Originally posted by @China Sistrunk :

If a home has been foreclosed by the bank, is that considered a REO property? Will the property be sold at property value?

Yes, it is now considered to be REO. The bank will put the property on the market through the MLS with an agent. My take is that a property value is what someone is willing to pay for it. So, yes it will be listed. But you can always offer less.

When a property is foreclosed on it is considered a REO. Depending on the situation, the lender would choose whether to auction the property off or list it with an agent. Most foreclosures are sold via auction as it is the faster way to sell the property (auctions are all cash, no contingencies, less decision making, etc.)

Updated 10 months ago

In order to know what REOs and foreclosures are, you have to understand the foreclosure process. A foreclosure is the process in which the original lender that has a lien, or financial claim, against the property seizes the property and sells it to recover the balance that is owed to them. Depending on the situation, the lender would choose whether to auction the property off or list it with an agent. Most foreclosures are sold via auction as it is the faster way to sell the property (auctions are all cash, no contingencies, less decision making, etc.). If the lender fails to sell the property then it is considered a REO. A very critical point to remember when it comes to banks and lenders is that they are not in the real estate business, they are in the money business!

@Noel Challenger thank you so much. If a lender fails to sell the property and the property is now considered an REO, will the banks or lenders auction or sell the property for what is owed or market value price? I am a newbie and I'm filled with questions.

While the bank may pay the agent to list for a small commission, the lenders want TOP price. In 2017 all REO properties were here on the MLS but one has to bid on line. Bidders need to pay 4-5% added on fee + technology fee($300). Most buyer agents get 0-1% commission. The lenders are not in a hurry to sell wanting top price. In Northern CA it has been close to market price while the quality is way inferior. The lenders allow clean up, some painting or even carpet replacement. Always sell AS IS with no inspection rpt provided.

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