What is an REO you ask? Let's first define what it is not......
* It is not one of those tasty cookie sandwiches, stuffed (or double stuffed) with creme and / or frosting.
* Nor is it a wild and crazy city in the South American city of Brazil - known for Carnivals and night life.
** An REO is an acronym - for "Real Estate Owned". That's nice, you might say - but if I own a home already, doesn't that really already mean that it is "Real Estate that I Own"? Technically you are right. But, if you are like many people - we say that we "own my home". It just sounds better.
So - who owns, or better yet, who uses the term: REO ?
Wikipedia gives a good definition of what an REO is, and that is a home, or a property, that a bank, or lending institution, or sometimes even the government - owns. They sometimes call these properties "assets". These properties are Real Estate that they (the institution) Owns.
So - how do the banks, lenders or goverment come to own these properties?
The most common occurence of how a bank or lending institution comes to be the proud owner of a home - is by foreclosing on the property.
Okay - so give me a quick definition of "foreclosure", you ask.......
"Foreclosure" is what happens when a homeowner stops making their mortgage payments to the lending institution - thereby, defaulting on their loan. That lending institution then has the right to start foreclosure proceedings on that property.
Each State is different as to how that works. The end result is that if the foreclosure goes through to completion - the property is now owned by the lending institution - and that institution classifies that property as one of their assets, it is now Real Estate that they Own.
"So, what do I do with this information?" You may ask.
Well, that is up to you. You could do nothing. You could do something. You could call these REO's by a different name or names; like "repo" or even "a bank owned property". Don't call them a "short sale" though - cause that is something different.
With this new found knowledge you now have (or you may already have had it) - you may be interested in finding out what these lending institutions do with these REO's. (Hint: they eventually sell them). Details on how they do that are for another post. But if you really don't want to wait and would like to find out more now - just ask me. Use the "Comments" section below, or my contact info is in the side box.
Thanks for stopping by - now go grab a glass of milk to go with your cookies you were possibly looking for when you first came to this blog.