REOs are quickly becoming a large section of California’s real estate market, but do you really know what they are? Below are a few of the more commonly asked questions regarding REOs.

What is an REO?
REO is an acronym for Real Estate Owned and is industry jargon for a foreclosed property which has been repossessed by a bank or lender.

When does an REO occur?
REOs or Real Estate Owned Properties are properties owned by a bank or lender. These properties have gone through the foreclosure process, but no one successfully bid on them for purchase, so they convert back to the bank or lender. There are many advantages to buying Bank REOs.
Advantages of Buying Bank REO Properties
• All liens against the property are removed once it becomes an REO, and property taxes are brought current.
• Unlike properties at foreclosure auction, REOs can be inspected prior to contract, and are listed with real estate agents.
• While many foreclosures are often in deplorable condition, REOs are typically restored to at least a readily salable condition by the lending bank.
• The bank or lending institution that owns the property will often offer financing with better deals than they would offer on traditional properties.
• The bank or lender that owns the property will often provide an allowance for certain repairs.
• You can save money in your title search if you use the same title company that the lender used during foreclosure. They will often discount the cost up to as much as 100%!
• REO properties are usually listed on your local MLS (multiple listing service).
• REOs will often times include appliances
• While in hot markets, you may not see a difference in price between an REO and a typical property, during slower markets, you can pick up an REO at discounts to the property’s actual value.
Note that lenders and banks do not like holding REOs on the books, and try to get rid of these as quickly as possible, so give us a call.
Rick and Joyce Tietz
Realtors
(925) 628-5105
http://www.tietzhomes.com
rick@tietzhomes.com
* Last updated by: Rick Tietz on 8/22/2008 @ 9:28 AM *

Hi Rick -

Thanks for the post. I think you've given a great primer on the topic that could be helpful to many people!

From your prospective, do you work with the banks to help move their REOs, or do you work with buyers and see them as an opportunity? While I have not personally dealt with them, my sister-in-law actually purchased one in Florida about 6 months ago. She got a great value and a home in very good condition, just as you explained above.

Thanks for the post!

Chris

When our Real Estate Market in Antioch, CA first started its decline due to home loans going into default we approached several local banks and took on some REO's. There is definitely money to be made being an REO agent, however we found ourselves getting out of touch with buyers and sellers, "Real People", and becoming Bank employees with procedures and deadlines. This was a full time job which concerned me for 2 reasons:
1. The Tietz Team has always made service the most important aspect believing that the money will follow. We were finding ourselves out of touch with the most important factor of any business, Clients, Customers, and Prospects the most enjoyable element of any business. Any agent-broker that is currently spending all their time and efforts on REO's will find themselves facing rebuilding a client base when Banks have sold the homes in their inventory.
2. What will transpire after the REO's are gone and we have focused all of our energy selling homes for a few non referring Bank Clients? I decided the best way to approach this was to get back to our roots and take care of real people. In this case it's buyers, buyers and more buyers. We now are privileged to be back representing clients, making friends and future business. We are closing 6 to 10 escrows per month and more importantly we are truly enjoying being Realtors again.
I suggest to any agent anywhere, you may be facing a market full of Foreclosed Homes "REO's, but rest assured that the buyers will come and when they do your area will be raining buyers. Market yourselves as Buyer and Seller agents, internet, first time home buyer seminars etc...

Thank You Chris
Rick Tietz