The real estate market is vast and there are many niches that agents can opt to specialize in to hone their desired clientele. Of course, no agent can hope to cover all fields of real estate, so it pays to focus on one or two specific areas. One area that has become more common in the real estate market today is REO real estate. These homes are past short sale, past foreclosure and are now owned by the bank. This niche has its own nuances and if you find you have a passion for this practice area, you can build a rewarding business serving a select group of buyers, no matter the current economy. Let’s review the basics, shall we?

What exactly is REO real estate?

REO stands for “real estate owned.” This happens when a property goes into foreclosure and the mortgage company is unsuccessful in selling it at an auction. When this occurs, the property then belongs to the bank and the task of selling the home falls to the bank and its chosen representatives.

How do you buy REO property?

The process is similar to buying a home from a private party. It is listed, just like any other property on the market. There is also an REO agent representing the property for the bank too. If you have questions about the property, you can contact the agent and they will gladly answer them. Ultimately, you are buying the property from the bank, so there will be extra paperwork and the process is longer than buying from a private party, so be prepared to have some extra patience.

What condition will the property be in?

This is largely subject to the previous tenants of the home. REO homes vary in their condition and the description of the home will more than likely tell you if the property will require some rehab. As a general rule, if you find that the pictures that accompany the listing don’t properly show enough of the home, you can request the status of the property from the listing agent and even schedule a showing. However, just because a home is owned by the bank does not mean that it will be in bad condition. Due to the number of agents that specialize in bank owned homes, many of the properties are well-maintained, stocked with appliances and freshened up, leaving you with much less work than you anticipated, which is always a good thing.

If you find yourself wanting to specialize in REO listings, it might be a good idea to seek out a mentor in the industry. Following the footsteps and best practices of a seasoned REO agent can show you the true inside aspect of the entire REO process, and who wouldn’t benefit from some inside industry information? Take the time to learn and in return, you’ll find yourself better able to service buyers and the banks alike, which is simply good business in the long run. » Read more: The Scoop on REO Real Estate