More often foreclosed homes are known as REOs (Real Estate Owned). REO indicates that the subject home or property has been foreclosed on and now owned by a bank (in most cases). Buying a REO property sometimes could provide a better deal for the buyer but it is not always the case. Here’s why.
REOs are more often priced lower than the market price compared to other properties available for sale. This is because some banks want to get the non-performing loan off their balance sheet as quickly as possible. Due to lower price, it brings many interested buyers creating somewhat of a competition among prospective buyers. This could lead to a bidding war and a higher price.
On the other hand, most of these sales are “as is,” you will need to spend money to do the necessary repairs. Lack of information is a major concern. Unless you have a good picture of how much it is going to cost you to get the REO ready for occupancy again, it may cost you more than you think. When it comes to unknown issues related to the REO, going for a traditional purchase could give you a better deal.