REO Sales

What is a REO Sale?

REO sale is the sale of a property the lender has acquired through the foreclosure process and now owns on their books. You will also see these properties described as “bank owned” or “lender owned” in some MLS remarks. Below are a few issues to know if you are considering this type of real estate purchase:

  • If the foreclosure was handled properly, any liens or judgments attached to the property subsequent to the date the mortgage was recorded will be eliminated, other than the possibility of a lien on fixtures with priority over mortgage.
  • The buyer will receive a “special warranty deed”…not a “general warranty deed”. The lender can only give such a title that the lender actually has. The sale will be “as is”.
  • There are the same issues as with short sales, such as no warranty relating to the structure, no property disclosure, possibility of “defective” HOA, etc.

Again, it cannot be said too often, consult a real estate attorney or real estate professional familiar with REO properties before taking the leap.

NOTE: Our MLS tool has a feature that will allow you to search specifically for foreclosed or bank-owned properties in our tri-county area.