Homes that have been repossessed and the owners evicted or otherwise absent from the property. These generally have not yet gone to foreclosure auctions.
Repo homes are real properties that have been repossessed by the lender when the owner fails to repay the mortgage loan. Buying and selling repossessed homes is an excellent way for individuals to make money in real estate. When the bank initiates the foreclosure process, it often results in an unsuccessful auction. Now the bank is essentially stuck with the repo home, and must pay for its upkeep, taxes and insurance every month. Repos cost banks a great deal of money. This is your opportunity to buy cheap homes and make a great profit.
Repossessed houses for sale can present you with a tremendous opportunity to make a great profit by investing in real estate, but only if you do it right. Great bargains on bank repo homes move fast, that's why it's so important to find up to date lists. We update our lists everyday, so you can find foreclosed homes as soon as the repossession process is complete. When the bank moves to repossess, we gather the data so you can be among the first to find out.
Technically, if the home is being repossessed due to property taxes owed on the property by the owner, you could pay off the balance of the taxes and take possession. This process is very difficult, though, and usually doesn't happen.
Banks are allowed to hold repossessed homes as long as they wish, but most want to unload their properties as soon as they can. Every month that a foreclosure remains in the bank's possession is a month of lost mortgage payments, so it is in their best interest to push sales along.
You can buy a repo home just like you can a regular home – by buying from the owner (the lender) through a real estate broker. You can also buy a repo home at a local county auction, but you have to generally pay in cash.
To many investors and prospective homebuyers, the answer to this question is yes. Depending on the property and circumstances surrounding the listing (such as the condition of the home, the neighborhood, the asking price, etc.) a HUD repo home can be an incredible deal, above and beyond what one can find with typically non-foreclosed, non-repossessed homes on the market.
To investors and prospective homebuyers, buying a HUD repo home usually represents a significant discount in price from traditional, non-repossessed homes on the market. In some cases, the discount can be as much as 50-60%. Of course, one thing to consider is that HUD repo homes are sold as-is. This means any repairs or renovations that need to be completed are at the expense of the buyer, not HUD. Also, HUD does not finance any repossessed home purchases.
If the investor or homebuyer has financing or cash available, is willing to possibly renovate or repair a home, and has price as his or her main priority, then buying a HUD repo home makes sense and would be a wise purchasing decision.
For any foreclosure, the amount that the home 'costs' (i.e. the price you will have to pay) is determined by a variety of factors. Banks primarily base their asking prices for homes off of the amount owed on the loan. For example, with a home that has an overall mortgage of $200,000, with $50,000 in principal paid down by the original homeowners, the asking price will be at least $150,000 - plus extra for legal fees, foreclosure filing fees, etc.
Most foreclosures sell at auction for less than the asking price. A discount of 5-10% is not uncommon, and in some cases, the discount can be far greater – particularly if the area has a glut of foreclosures. In areas with fewer foreclosures than average, the final sale price will be higher. But, as a general rule, in any case the asking price will be based off of the amount still owed on the loan, plus expenses incurred by the bank.
In the case of real-estate owned properties - or REO homes - the asking price will typically be even lower. REO homes are homes that did not sell at foreclosure auctions, meaning the bank has an extra incentive to sell the property to a bidder with a reasonable offer. Discounts of 10-20% are common with these properties. In some cases, the purchase amount that the buyer pays will not cover the cost of the remainder of the loan.