An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction. You see, most foreclosures auctions do not even result in bids. After all, if there was enough equity in the property to satisfy the loan, the owner would have probably sold the property and paid off the bank. That is why the property ends up at a foreclosure or trustee sale.
Foreclosure sales begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney's fees, and any costs associated with the foreclosure process. In order to bid at a foreclosure auction, you must have a cashier's check in your hand for the full amount of your bid. If you are a successful bidder, you receive the property in "as is" condition, which may include someone still living in the property. There may also be other liens against the property.
Since what is owed to the bank is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale. Then the property "reverts" to the bank. It becomes an REO, or "real estate owned" property.
Purchasing an R.E.O or an investor owned property should be as easy as buying a "Standard" property. The only real difference is that the the owner takes a very measured and deliberate approach as they perform their due dillligance. The extra measures taken are driven by intense oversight by both Governmental and non-governmental agegencies which are tasked to ensure that these types of properties are sold in a very open and transparent process. This extra effort provides an enviroment in which both Selling Agents and thier clients can be confident that their offer is being handled fairly.
201 Marine Avenue
Balboa Island, CA 92662
CalRE No. 00783792
CalRE No. 01193486