How do I buy REO properties?

[Patrick Philip]

I am interested in buying REO's probably for flips. I am seeking clarification on the process of how a property becomes REO. A bank, private lender, or government forecloses on someone for nonpayment. Then, the property becomes the possession of the county that it's in and the county auctions it off. Generally, the lender will buy back their property at the county auction so they don't lose their investment.

Then, the lender auctions it off again at a private auction? Or do they sell it through traditional channels like the MLS or FSBO?

What are the most common ways that I could buy REO's? Both from banks and from Freddie Mac and Fannie Mae. Is there such a thing as FHA REO's? Or even USDA?

[Christopher Phillips]

@Patrick Philip

REOs are bank owned properties. They'll be listed on the MLS like any other house.

Fannie Mae homes will be listed on the MLS but bids go through their website Homepath.com

HUD will also list their homes on the MLS, but bids go through their website Hudhomestore.com

To purchase any of these, you go through an agent on Realtor.com or Zillow.com like any other house.

HUD and Fannie Mae will often require an initial bidding period for owner occupants only and then open up bidding for investors.

In some parts of the country, Fannie Mae homes tend to be occupied when you buy them. So, that's a consideration. Each listing will say if it's an occupied home or not.