Dennis Liddell, REALTOR®
"The Professional Advantage"
ABR® Accredited Buyer Representative     (602) 750-8026
REO Information

What is a Foreclosure?

A Foreclosure occurs when a homeowner misses his or her payments and defaults on the mortgage. Property in foreclosure is often referred to as “distressed” because the owner is in financial distress and is behind on his or her payments. The owner’s financial distress can be caused by a variety of unfortunate circumstances. This often results in a bargain buying opportunity for a well-informed homebuyer or investor, who can end up helping the homeowner avoid serious credit problems.

What is a Pre-Foreclosure?

Pre-foreclosure represents the first stage in the foreclosure process. In this phase, the homeowner has missed at least one payment and is now considered delinquent on the loan. A pre-foreclosure can also be referred to as a NOD (notice of default) or Lis Pendens, which is a formal warning sent to the borrower on a loan regarding the delinquent payment(s).

What is REO Property?

REO stands for Real Estate Owned (by the Bank.) REO properties are another great opportunity to purchase foreclosures. The REO stage is the process after the auction, when the lender is either the successful bidder or there are no bids at all. In either case, the bank becomes the legal property owner and the property is considered a “non-performing asset” of the bank, which is a fancy way of saying the bank doesn’t want to hold on to the property. This means a solid buying opportunity for you, the homebuyer. While buying property from the bank is the easiest way to purchase a foreclosure, the savings opportunities are typically less than buying a pre-foreclosure or auction property.

What is a HUD Home?

HUD is a shorthand term for the U.S. Government’s Department of Housing and Urban Development. HUD’s mission is to increase homeownership, support community development and increase access to affordable housing, free from discrimination, for low- and moderate-income Americans. When someone with a HUD-insured mortgage cannot meet the payments, the lender forecloses on the home, HUD takes ownership of the home and pays the lender what is owed. HUD then sells the home as quickly as possible, often at a discounted price. There is real potential for significant savings in buying HUD's foreclosed property.

HUD Homes are sold “as-is,” without warranty. That means that HUD will not pay to correct any problems. Even if a HUD Home needs fixing up (and not all of them do), it can be a real bargain! For example, HUD’s asking price on the home will reflect the fact that the buyer will have to invest money to make improvements. HUD might offer special incentives such as an allowance to upgrade the property, a moving expense allowance, or a bonus for closing the sale early. Keep in mind that on most sales, the buyer can request HUD to pay all or a portion of the financing and closing costs. Your real estate agent will have details. We encourage you to get the home professionally inspected before you make an offer so you will know what repairs you may have to make BEFORE you submit your bid.


Dennis Liddell, REALTOR®
23623 N. Scottsdale Rd., #D3-274 • Scottsdale, AZ 85255
ABR® Accredited Buyer Representative • (602) 750-8026

North ScottsdaleScottsdaleNorth Phoenix

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