You can find great deals on REO properties. Most are listed below market value. The down side is that you will purchase the property "as is". No repairs will be made by the bank.
The previous answers are correct. REO means that a bank owns the property. They have foreclosed on the previous owner and are now selling the property.
Bank owned properties used to be more challenging. Now the process is very similar to any other owner. You make an offer and it is negotiated with the bank. The downside is that there is no seller's disclosure required on these properties, so it is often hard to judge the actual condition until you get to the inspection. It also makes the inspection process very important! Also, rarely will the bank make any repairs. They will often reduce the price, but not pay for the repair, unless it is a repair that is critical in order to get financing.
It sounds like you have lots of questions. Feel free to give me a call. I work with lots of first time buyers and my services are free to buyers. Don't worry, I won't pressure you to buy something if it's not the right move for you. I became a REALTOR because I firmly believe you should get all your questions answered and feel very comfortable with your decisions when you are considering buying a home!
In early foreclosure proceedings like the auction at the court house steps you only buy the banks interest in the property. It could be worthless.
reo means the bank really owns 100% of the property.
REOs are becoming a more viable option for home buyers as the banks' inventory rises from the current foreclosure crisis.
If you are interested in buying an REO because of the great deals to be had (and there are many), be sure to check out the property thoroughly because the bank will not have first hand knowledge of the true condition of the home like an owner occupant selling their home.
For a list of REOs, visit the site below and contact us.