What is an REO?
|REO stands for "real estate owned," signifying that the property is owned by the lender. Thus, such properties have already gone through the foreclosure process and have an established price and terms for a purchase. |
Buyers can treat those properties in much the same way as other non-distressed properties with the following differences. The owner/lender in REO sales did not occupy the property. Therefore the lender is not required to provide all of the normal disclosures to buyers of the property. Most notable is the lack of a Transfer Disclosure Statement which in normal situations advises buyers of conditions known to an owner such as past repairs.
Agents involved in the transaction still must do their due diligence to report to the buyer in writing any observed defects and "red flags" and other required disclosures are also provided, such as the Natural Hazard Disclosure and report. Thus both the listing agent and the selling agent must personally inspect the property and note visually observed conditions and defects. These are reported to the buyer.