When someone says that a home or property is “real estate owned” they usually describe it as REO. When someone says REO foreclosures, they are usually discussing properties already through the entire foreclosure and auction process, and back in the hands of the bank or lending company. So a home that is in the midst of a foreclosure is not an REO property? No, the foreclosure process is a lengthy legal period that usually involves the bank working with the borrower to try to formulate some way in which the foreclosure can be avoided. The bank will then usually offer the property up for auction at the amount due on the loan, and if this is not bid during the auction, the property is then reclaimed by the bank. Currently, there are hundreds of thousands of active foreclosures, and even more homes in the hands of the banks. Because of this many banks are creating rental agreements with the former owners that allow them to remain in the home, but which makes them aware that they will have to vacate when the property is once again sold. Now, many people are torn over when to step in a buy a home – when it is in the foreclosure period, or once it becomes one of a bank’s REO foreclosures. The answer is difficult to determine, but there are some notable benefits to waiting for the process to be completed and then making an offer.
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