Foreclosures can be divided between pre-foreclosures (from filing of public notice to eviction) and REO's (houses taken by banks and vacant right now). First time homebuyers or real estate investors, especially those new to real estate investing, will prefer bank foreclosure to any other form of property buying because Real Estate Owned (REO) properties offer the safest, easiest method of acquiring property.

If the property fails to sell at auction, or if the lender ends up as the highest bidder, the home becomes REO, or "real estate owned" by the bank. Lenders then try to sell these REO properties on the open market, often through a real estate agent or third-party marketing company.

In markets where real estate is entering a slowdown, especially in those areas where foreclosure filings notices of default are increasing, lenders face downward market pressures. Consider, lenders are not chartered to own and manage (REO) property; in fact, they face scrutiny and pressure from state and federal regulators to dispose of foreclosed properties quickly; therefore, banks will not hold property. They will sell at auction, no matter what the price is. This process takes time, but favors those investors or homebuyers who are diligent and knowledgeable regarding when and in what time to purchase foreclosure property.

6 Reasons to Like Bank Owned (REO) Properties: