REOs in Northern Virginia/South Carolina

One of the unfortunate by-products of a down economy is the rise in foreclosures.  With the rise in Virginia/South Carolina foreclosures, there is also a rise in REOs in Northern Virginia/South Carolina (real estate owned properties).  While a foreclosure may sound similar to an REO, they are actually two different animals.  It is important to know the difference.

FORECLOSURES
In a foreclosure, the homeowner has defaulted on their Northern Virginia/South Carolina home, which is then taken back by the bank, forcing the homeowner to forfeit all claims to it.  The bank then turns around and puts it up for auction.  At a foreclosure auction, the minimum bid includes the foreclosure costs, any attorney fees involved and, of course, the balance of the loan left by the previous owner.  The winning bid in a foreclosure must be at least the minimum required by the bank.  Winning bidders must have a cashiers check in hand for the full amount of the bid.  They receive the property in an "as is" condition, which includes any structural issues, liens against the property and anyone that may be living on the property at that time (as can be the case with rental properties).  If no one bids the minimum amount, the home will not be sold.  Because many homes that are forced into foreclosure are worth less than what is owed on them, many foreclosure auctions end up without sales.

REOs
When a Northern Virginia/South Carolina property has not been sold at a foreclosure auction, it reverts back to the bank/mortgage lender and becomes an REO (real estate owned).  This shouldn't be looked upon as unfavorable by someone looking to purchase a property, though.  It doesn't necessarily mean that there is anything wrong with it.  Usually, it just means that the previous homeowner couldn't keep up with their monthly mortgage obligations.  Since mortgage companies are in the business to finance real estate, not own it, they are more likely to work with a prospective buyer on price and terms in an REO.  Typically, a mortgage company will take care of any current tenants or liens to make it easier to sell.  They also allow potential buyers or their appraisers to inspect the property before any deal is made.

There are benefits to buying a home whether it is via a foreclosure or REO.  REOs in Northern Virginia/South Carolina make great investments for first time homebuyers, growing families and retirees alike.  If you're interested in purchasing an REO in the Northern Virginia/South Carolina area, please don't hesitate to contact me.

Originally posted on my Northern Virginia Homes blog here: http://northernvirginiahomes.net/2011/10/20/reos-in-northern-virginiasouth-carolina/.