What are REO Homes?

If you’re looking at homes to buy, you might hear the word REO. You might also wonder what REO occupied means. This article will explain these terms in an easy way and why they matter if you want to buy a house.

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What is REO?

REO means Real Estate Owned. It is a term for a house that a bank owns because the previous owner didn’t pay their loan.

Here’s what happens:

Someone borrows money from a bank to buy a house.
If they stop paying the loan, the bank can take back the house through something called foreclosure.
If the bank tries to sell the house but no one buys it, the bank keeps the house.
That house is now called an REO property.

So, REO means the bank owns the house after the owner couldn’t pay.

What Does REO Occupied Mean?

You might hear REO-occupied. This means the bank owns the house, but someone is still living there.

Why could this happen?

The previous owner or renters have not moved out yet.
The bank hasn’t asked them to leave yet.
Sometimes people live there even though the bank owns it.

So, REO occupied means the house is owned by the bank but still has people living inside.

Why Does the REO Occupied Meaning Matter?

If you want to buy an REO-occupied house, knowing if it’s occupied is important because:

1. You May Not Get to See the House Easily
If someone lives there, it might be hard to visit or check the house.

2. The House Could Be in Good or Bad Shape
People living there may take care of it, or they might not.

3. You May Have to Wait
The bank might have to ask the people living there to leave before you can move in. This can take time.

4. The Buying Process Can Be Longer
Because of the people living there, selling the house can take longer and be more complicated.

How Does a House Become REO?

Here’s how a house becomes owned by the bank:

The owner stops paying their loan.
The bank starts a process to take back the house (called foreclosure).
The bank tries to sell the house at auction.
If no one buys it, the bank owns it and it becomes an REO property.
The bank tries to sell the house to someone else.

Problems When Buying REO Occupied Homes

Buying an REO house that is still lived in can be tricky:

Hard to visit the house.
Not sure what condition the house is in.
The bank might need to ask current residents to leave, which can take time.
Risk of damage if people living there don’t care for the house.

Tips for Buying an REO Occupied House

If you want to buy an REO home where people still live, keep these tips in mind:

1. Find a Real Estate Agent Who Knows REO Sales
They can help you through the process.

2. Try to Check the House
Look at it as much as you can before buying.

3. Be Ready to Wait
It may take longer to finish the sale.

4. Save Some Money for Repairs
The house might need fixing after you buy it.

5. Ask About How the Bank Handles Moving People Out
Knowing this will help you plan better.

Good Things About REO Houses

Even with the challenges, there are reasons to consider REO homes:

The price might be lower than regular homes.
The bank owns the house clearly, so it’s usually free of other debts.
Fewer buyers want these homes, so you might have less competition.

What Happens After You Buy an REO Occupied Home?

Once you buy the house:

If renters live there, they might stay until their lease ends.
If the old owner lives there, the bank may need to start a process to have them leave.
You might need legal help if people don’t move out.
After the house is empty, you can move in or rent it to someone else.

So, what is REO, and what does REO occupied mean? REO means the bank owns the house after the owner didn’t pay the loan. REO occupied means someone is still living there even though the bank owns it.