Silicon Valley Real Estate Investor

The practice of buying bank-owned properties is getting a lot of attention because it represents such a big, and growing, supply of ready-for-sale housing.

When a borrower stops paying, one of the principal recourses a lender has is to take over the property against which the loan was secured, and sell that asset to try to recover its money. Foreclosure can be a long process, but at the end of it, if no other way is found of settling that debt, the ownership of the property will fall to the bank. Banks are good at lending money but not at managing properties, so generally the banks don’t want to hold on to the properties and will usually try to sell them quickly. Traditionally the holding and selling of real estate this is handled by the “Real Estate Owned” department of the bank, thus today’s “REO” for short hand …