What's an REO?

 So you want to help banks pay off some of their deals gone bad by purchasing an REO.

What is an REO?

To answer this we need to know a few things....

 

What is a Short Sale??	'A short sale occurs when a lender agrees to take less than the full loan payoff for an owner's property. In most cases, the owner is in default and is not making their payments for whatever reason. Short sales, in most circumstances, are the first step to avoid foreclosure.' Courtesy: https://www.realtown.com/callchristina/blog/general-real-estate-questions/foreclosures
How does a Short Sale become an REO?	'Although the lender(s) will recover less than the total loan amount in a short sale, they may prefer this in lieu of foreclosure. The costs of foreclosing on a property may be more than the bank's loss by taking a short sale. Also, the property may not sell at auction and then the bank would be forced to take it back as an REO (Real Estate Owned) property, which then they would have to maintain, list and sell themselves.' Courtesy: https://www.realtown.com/callchristina/blog/general-real-estate-questions/foreclosures
Should I sell my house as a short sale?	'Short sales are very complicated and the outcome is not guaranteed. There are so many variables that I can not even cover everything in a couple paragraphs. The bank (lender) is not obligated to take a short sale and in most cases the process to get one approved is cumbersome and frustrating for the Buyer, Seller and the Realtors. Many times these requests are not approved by the bank and the property ends up going to foreclosure anyway. Banks are overwhelmed with short sale requests and the approval process can take months. Each bank evaluates each individual request on a case by case basis. Many times there is more than one lender involved. Not only do the banks consider the borrower's personal and financial situation, but they also consider an appraisal of the property, market conditions, the banks financial situation, their current portfolio and in many cases have to consult with an outside investor who purchased the loan at some point. Given all of these varying circumstances, you can imagine why this process takes so long. Most buyers do not want to wait out this long process and deal with the uncertainty. If a short sale is approved, it can be below market (depending on the bank appraisal), but by the time it's approved the market may have further declined and it may not be a great deal after all. If you are considering selling your home as a short sale, please consult with a CPA and an Attorney first! Realtors ARE NOT qualified to give you the type of information you need to decide if a short sale is right for you.' Courtesy: https://www.realtown.com/callchristina/blog/general-real-estate-questions/foreclosures
What Does REO stand for?	REO means- Real Estate Owned in other works Bank Owned property.  A short sale becomes an REO when a lender, meaning a bank or financial institution like Freddie Mac, makes a failed attempt at auctioning an aproved Short Sale property.  When no one buys the home at the Trustees Sale the bank is forced to forclose on the home, maintain the home and list it for sale as an REO.
What is Freedie Mac and Fanne Mae and how do they fit in the REO process?	Watch this short informative video.... http://www.freddiemac.com/