Search Guide

What are Repossessed Homes?

Sep 05, 2013 - 2 Min read
Real Estate Expert

Repossessed homes are properties that have been foreclosed by lenders, creditors or government agencies because the homeowner (or mortgagee) failed to make mortgage payments or property taxes on the property. Also called bank-owned foreclosures or real estate owned (REO), repossessed homes are in great demand today because of the growing number of foreclosures and declining prices. Generally banks, private institutions and government agencies repossess the homes of delinquent borrowers and sell them to the general population.

What are the Advantages of Buying Repossessed Homes?

When lenders repossess homes they need to sell them quickly at auction — or through other means — in order to reclaim the money lost by the delinquent loan. For first-time homebuyers and investors, repossessed homes that have been foreclosed upon by the lender offer many opportunities.

Frequently, lenders have hundreds — and sometimes thousands — of repossessed homes they are seeking to sell at discounted prices. Repo properties are great deals because they can be bought at or below market value. Lenders want to get their money back quickly and they often reduce the asking price significantly.

How Can I Buy a Repossessed Home?

There are many ways to purchase repo properties. But buyers of repossessed homes need to be careful because most repossessed homes are sold “as is” and do not come with any warranty. Moreover, many repossessed homes are in desperate need of repair because the previous owners did not properly maintain the property. And some repo houses are in terrible locations. Still, many investors and homebuyers are interested in snatching these repo fixer-upper properties. While deals can be had on repossessed homes, prospective buyers need to do their homework.

Repossessions are rising because many investors are not buying properties at courthouse auctions, sending the properties back to the banks, creditors and government agencies that originated the loans. Moreover, many homeowners are facing a tighter credit environment, reduced mortgage competition and tougher refinancing conditions as banks continue to tighten lending standards to recoup their battered profit margins.

There are so many repo properties that lenders are hosting mass auctions nearly every weekend in California, Florida, Michigan, Nevada, Arizona and other states, where banks are cutting their losses from millions of dollars of bad debt. In fact repossessed bank-owned properties are so popular now that realtors nationwide are hosting repo home tours, filling small buses with repo buyers and taking them to foreclosed homes.

You might also like
Bank of America and Foreclosures
4 min read Bank of America and Foreclosures In January 2008, Bank of America, the second biggest bank by assets, agreed to pay $4.1 billion in stock to acquire Countrywide Financial, the troubled lender that became a symbol of the excesses that led to the subprime mortgage crisis and the current foreclosure epidemic. The acquisition — which is expected to close in the […]
Bank-Owned Properties and REO (FAQs)
3 min read Bank-Owned Properties and REO (FAQs) What is an REO? REO is an acronym for Real Estate Owned and is industry jargon for foreclosure property repossessed by banks or lenders. If a lender or bank is the highest bidder at a foreclosure auction — or if no third party bids at the auction — the property reverts back to the lender […]
Checklist for buying Bank Owned (REO) properties
4 min read Checklist for buying Bank Owned (REO) properties A lot of things go into buying bank-owned (REO) properties. New real estate investors often expect the process to be simple, but there are many moving parts! The best way to make sure you don’t miss anything when buying bank-owned (REO) properties is to make a checklist for the process. Of course, before you buy […]