Home buyers and investors probably can get a good price on REO property: a home owned by the lender after a foreclosure. The low price is due to the possible condition of the house. In a regular home purchase, the house probably has been kept up by the owner-occupant but that’s not always the case with properties that are unoccupied after a foreclosure.
REO properties are offered “as is.” Typically, the seller will provide no warranties of any sort. In most real estate transactions, the seller will make disclosures about lead paint, radon, mold, etc., and spell out the property’s history. With REO properties, sellers may not offer those disclosures.
Therefore, if you are buying a REO property, be sure the contract has a contingency for a property inspection. Bring in your own inspector. If major defects are found, you may decide to ask for a lower price or walk away from the deal.