Real estate owned or REO…is a class of property owned by a lender typically a bank, government agency, or government loan insurer, after an unsuccessful sale at a foreclosure auction. When a lender/ beneficiary finishes the foreclosure process the property can then be listed as an REO property.That is the technical definition, however most people know them as foreclosures. Most of the larger banks and government institutions have REO/Asset Management companies who handle departments that field bids and offers, oversee upkeep, and handle sales. Most REO properties are listed with local MLS(Multiple Listing Services by REALTORS for marketing properties.) Bank properties are typically in need of repair and/or maintenance and the cost of these items is the responsibility of the mortgage servicer(bank or government agency.)
What Effect Will REO Have on Housing Recovery?…The nation’s largest banks and mortgage holders currently own over 872,000 homes which were repossessed through foreclosure or other means. That is nearly 2x the amount foreclosed on in 2007, when the financial crisis began. Unfortunately, that may not be the worst news because the same lenders are ready to repossess over 1,000,000 more homes according to RealtyTrac reports. The huge number of currently banked owned foreclosures and the large pending amount are causing economist to fear a double dip in the real estate market. According to Treep, a leading real estate research firm, will force the lender-owned homes to sell for deep discounts over the next 2 years and at a cost of almost $40 billion in losses. The opinion of REALTORS is that lenders are overwhelmed with the huge inventory which many times the homes are outdated, often overpriced by 10% or more and lenders take to long to accept or reject the offer. The largest problem is it takes over 400 days to foreclose and on average 176 days to sell.
My personal opinion is we are a long way from a housing recovery being done and it will continue to be a buyers market for some time to come. Marion County has some of the best prices in the state. Many can buy a home for less than the cost to rent in the area. Want to learn more or have questions, please call, text, chat or email me.
“Until Next Time”
Source; “As Lenders Hold Homes in Foreclosure, Sales Are Hurt, New York Times May 23,2011