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Tuesday Terms ~ What Does REO Stand For in Real Estate?

REO stands for Real Estate Owned properties, which describes properties that get reclaimed by the bank or the government agency which financed their mortgage after failing to sell at a real estate auction.

When a listing has REO, it also signals that buying this property will involve doing a deal with the bank; it is may involve being a GREAT DEAL!  Generally, REO properties get sold on the open real estate market using a real estate agent or in bulk sales to investors. REO properties generally get sold at a discounted price when compared to comparable properties.  What happens is the banks will typically sell REO properties "as-is." So, as a buyer, a professional property inspection allows you to make an educated offer for purchase considering the costs that will be involved to repair any existing defects

A little history...The nation's first REO auctions, referred to as “penny auctions,” which forced profit-hungry banks to purge unsold properties, which became liabilities.  These came into action in the '30s after the stock market crash  and almost 0.73 percent of the homes in the United States became bank REO properties with about a thousand occurring daily.

For more information on REO properties or any other propertie, please contact LouAnn!

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