Finding a home feels like an unattainable dream for many in the United States. Over 56 percent of Millennials and Gen Zers hope to purchase a home in the next two years, but that dream is out of reach with rising interest rates and housing prices. An REO-occupied residence is one option when shopping for your first home.

These homes are affordable options that have foreclosed and are now the property of a bank or financial institution. They’re an affordable housing option, though knowing what to expect when taking this route for your housing needs is vital.

The good news is that you’re in the right spot to learn more about real estate-owned properties. Continue reading to determine if an REO property is worth your hard-earned cash today!

What Is an REO-Occupied Property?

REO-occupied properties are homes with ownership transferred to a bank or financial institution. It’s a standard term to describe a foreclosed property in the real estate industry. The bank will repossess the home if the buyer finances the purchase and fails to make the necessary payments.

The lender will take legal action after the buyer fails to make the agreed-upon payments. The home will go on a real estate auction, where it is sold to the highest bidder. The new buyer with the winning bid must pay in cash to complete the deal.

If no deal is struck, the house becomes real estate owned. It’s not fun for anyone involved but provides a path toward affordable housing for savvy real estate investors and first-time home buyers. You can work with reo property management to manage your newest asset.

Tips for Buying REO Property

The first thing to do when interested in buying an REO property is to learn more about the neighborhood. Determine if it’s a safe place to live with ample amenities. It’s a wise move if you plan to invest in the house and use it as a rental property.

If there are several real estate-owned homes in the neighborhood, heed the red flag and look for other opportunities. Multiple REO homes are a sign of a severe underlying problem.

It’s also wise to get an estimate of the home’s value. You want to avoid paying top dollar for a house needing significant property repairs. Determining the home’s fair market value is the best way to determine a reasonable bid for the occupied property.

The last step entails estimating the renovation costs. Knowing what you’ll need to pay to make the home look beautiful again will help you decide if it’s a deal worth pursuing.

Consider Buying Foreclosed Property Today

Buying an REO-occupied home is an excellent way to find your starter home and turn it into the house of your dreams. The foreclosed property is much cheaper than a traditional home, though it’s best to determine its value before making a bid or offer. It’s a savvy way to add real estate assets to your portfolio.

Investing in real estate will put you on the fast track toward financial freedom. Read more of our Real Estate content to find the perfect home or property today!