Orlando Real Estate

There are a lot of acronyms and terminology that get thrown around in the real estate business, and many times we don't stop to explain what they mean. When I am speaking with my customers, I do my best to define our jargon. One of the terms that has come up a lot over the last several years in Orlando is REO. What does REO stand for? What does REO mean?

First, REO is an acronym, it is not the river separating the US from Mexico, nor is it a song by Duran Duran. The acronym is used by banks to describe real property that they have foreclosed on and taken into their inventory. The letters stand for Real Estate Owned. That is what banks call properties that they have taken back through foreclosure. Second, REO means exactly what it stands for, Real Estate Owned. Who owns it? The bank that took it back in the foreclosure process. When a property becomes REO it means the bank owns the property.

The foreclosure process varies by state, but the end result is the same. Once the bank has foreclosed on the property they take it back into their inventory of real estate owned. At this point, Freddie Mac, Fannie Mae or HUD my have to settle with the bank if there was some type of guaranteed loan involved. To the end consumer it doesn't make a lot of difference if the bank, Freddie, Fannie or HUD owns the property. It is called an REO regardless, and it just means that the property has been taken back through the foreclosure process.

Two of the most common questions I get about REO's are:
1-What will the bank do with it?
2-Can I buy it from the bank, before it goes on the market?

The simple answer to each of these questions respectively is: 'sell it' and 'no'. Sometimes banks have issues to resolve with the property, before they put it on the market for sale. Many times they will actually make minor or even major repairs to the property to get the most from the sale. They always get multiple broker price opinions (BPO), before listing the property with one of their network brokers. Sometimes the bank will sell off properties in bulk sales to investors purchasing multiple properties at once. The bank is NOT going to sell it to you, before it goes on the market though. They want to get as much as they can for the property, which is why you always see them listed with a REALTOR®.

Posted by David W. Welch on February 4th, 2016 1:44 PM


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