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Foreclosure / REO

Foreclosure and REO are two terms that never cease to baffle consumers and homeowners alike. If you are trying to find the best deals on foreclosure homes, the first step is to properly understand the foreclosure process. The most common question posed by most consumers is:

Which is a better option - Foreclosure or REO?

The truth of the matter is that it is impossible to provide a standard, boilerplate answer to this question, since every case is different and must be assessed on its own merits. By evaluating the features of both Foreclosure and REO, you will have a much firmer and clearer idea as to what their respective strengths and drawbacks are.

You can then choose the option that best suits you or poses the least amount of inconvenience.

Let us take a closer look at each of these :

Real Estate Owned Property (REO)

REO stands for Real Estate Owned property, and a REO will only ever occur in case of a very specific condition - When a property has been made subject to a foreclosure order and has subsequently failed to attract a suitable purchaser. Due to this lack of progress then, the mortgage provider who attempted to foreclose the property will then seek to sell the property in a new transaction.

The benefits of REO are listed as follows:

  • Reduced sales price - Mortgage providers will be very anxious to earn some form of profit from the property, and in order to entice purchasers they will offer a reduction in the initial asking price. Discounts of up to 20-30% are not unheard of in such cases.
  • No Administration or Legal Problems - Administrative and legal issues are handled by the mortgage provider. As an added sweetener, the mortgage provider will resolve tax liability and any pending legal procedures.
  • No danger of a cloudy title - Whenever you purchase a property subject to REO, the title of the property will be cleared of inhibitions, diligences and land attachment orders.
  • More room to negotiate the terms of the sale - Again, the buyer holds a lot of sway and they may be able to negotiate with the mortgage provider to add incentives such as repair work, cosmetic alterations to the property or a reduced interest rate.
  • All taxes will be paid in full - When you buy a REO property, there is no need to worry about being caught out with a backdated tax liability bill or any kind of pending payments.


When a property is seized by a mortgage provider as a result of missed or defaulted payments by a debtor who secured the property as collateral, it is referred to as a "Foreclosure". A Foreclosure is for all intents and purposes, an auction of sorts as the buyer will be required to meet a minimum bid.

When you purchase the property which has been foreclosed you do so on the basis that you will assume ownership of the property in its current state of health. Here are some of the benefits if investing in a foreclosed property:

  • Low prices - Foreclosed properties can be bought at a discount of 30 to 50%, from their true market value.
  • Resell and make profits - Many consumers buy a foreclosed home or property at really low prices, and then resell it after renovation and repair. You can make significant profits by reselling the home after some inexpensive and minor modifications and repairs.
  • Ready to Move-in - Once you have bought a foreclosed home, you can move-in immediately.
  • Flexible financing - When banks sell foreclosed properties, they are more than willing to offer low interest rates and flexible financing options, to close the deal quickly.

At "Appraisal California", you will get complete help and expert guidance in buying a foreclosed/REO property. From finding the best and cheapest deals to settling all the legal issues, we will help you at every step.

We pride ourselves in our strong customer service!
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