When the bank first asked me to list a property that they had repossessed, I didn’t know what a REO property was. It seems to mean Real Estate Owned (by the bank). A few years ago, we had no idea what these were in central Iowa. We never saw them. Ever since the real estate market began experiencing difficulties, foreclosures and REO properties have been popping up across the country. Even here in Iowa!

These bank foreclosures have kept home prices low. If you’re in the market for a new home, you may be able to save by buying directly from the bank. Keep in mind that even if the bank wants to get rid of these properties, they are experts at making money. You will have to bargain to get the type of deal that is available to you. Don’t try to go it alone, you’ll want an experienced real estate agent by your side to help you navigate these difficult waters.

Many people will wait for the market to start a stronger recovery. This is a safer bet, but those who enter earlier will benefit more. Home prices can always fluctuate and we don’t know what the economy as a whole will do. We have to weigh the benefits and decide where to place our investments. Real estate, for some people, will always be a winning option.

Don’t fall for the idea of ​​REO. The fact that so many of them are on the market means prices are lower on average across the board. If you find a house on the market that you really like, chances are it will be much more affordable than it would have been not too long ago. A good deal is a good deal, and the important thing is to find a house in a good neighborhood that will increase in value over time. Obsessing over one approach or one type of property is a common mistake for the American home hunter. Be flexible and consider all the possibilities.

Before you do anything with foreclosed properties, make sure you have your finances in order. You’ll need to be ready to pay a high percentage of the cost of the house and cover closing costs, even if you can negotiate a lower price with the bank. You’ll want to know exactly how much you can afford before you and your real estate agent begin the negotiation process.

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