REO’s are properties that are owned by the mortgage company. REO’s are usually homes that were acquired by the lender after an unsuccessful foreclosure auction.
If foreclosed properties go to a public auction and nobody bids enough to cover the amount owed against the property then this is considered an unsuccessful auction and the lender takes possession of the property. Because what is owed to the bank is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale.
For investors flipping REO or real estate owned properties it’s much like flipping short sales except the properties have already been foreclosed on and repossessed by the lender.
Many times real estate owned homes will sell for less than the past loan balance, yet most REO properties will sell at market value. There are many real estate investors who hunt for good deals and opportunities to flip REO properties on a regular basis, usually seeking properties that require renovations that will be sold below market value.
Learn about Flipping Short Sale properties here.
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