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REO is said to be the property that failed to be sold in an auction, hence the property has already gone back to its owner and the mortgage no longer existed. The lender settles eviction tax liens and the dues from the home. The buyer receives the tittle insurance policy.The bank or the mortgage company of the bank foreclose on a property . The lender finally gets clear of the hassles and finally hires a local real estate agent. The lender then tries to recover almost all of the money lent on the property.The bank will hire a local realtor once the property has already been declared as an REO, to evict tenants , perform inspections to the property and also do minimal repairs on the property. Most banks prefer to sell the property in an "as is " condition. In today's recessed economy, few investors are willing to purchase a house for more than it is worth. Additionally, foreclosure properties oftentimes require numerous repairs and renovations. In most cases it does not make sense to purchase a property at a price above current market value, let alone pour more funds into repairs. Instead, savvy investors are willing to wait for foreclosure properties to revert to the bank.Banks does not want to own these type of property since having these properties signifies that its a bad loan that the bank has given and is a liability and not an asset.Every time that a bank owns an REO indicating that they are losing money.
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