Is it risky to Buying an REO property for a primary residence?

[Ian Reynolds]

It looks like a number of really attractive REO properties are on the market in an area I am interested in moving my family. I would love to purchase one to live in as a primary residence. Savings look to be about 50-60k under the target market. However, it appears that the down payment needed for an REO property is substantially higher than what would be needed for a regular property on the market.

• It looks like I would need to put down 20% for an REO property
• A regular property by contrast would require me to put down only between 4-5% based on conversations with bankers.

Could I purchase the REO property then put traditional financing on it and get back to a 4-5% total down payment?

What are the pros and cons of this approach?