Some people think that REO properties are the same as foreclosures. However, there are slight differences between the two. When a homeowner is unable to pay their monthly payment, the mortgage lender reclaims the property and attempts to sell the home at auction. If the home doesn’t sell at auction, the property is returned to the lender, in which it becomes an REO property.

Since mortgage lenders don’t want a stockpile of REO properties, they are more than eager to sell these homes. If you want to buy a home below market value, this is the way to go. Still, mortgage lenders want to make some money. Thus, you may not find an unbelievable steal or get a dirt cheap home. But you can definitely save money.

If you’re looking for REO properties, contact a few local lenders. Many have websites that allow potential buyers to view available homes. Browse the listing and pick a home. Next, you’ll need to tour and inspect the property. Talk with a real estate agent and have them arrange a viewing.

Because most REO properties are sold “as-is,” there may be minor or major damage. This can work to your advantage. Make an offer and take the repair cost into account.