First-Time Home Buyer Q&A - Quicken Loans Zing BlogIn this post-2008-financial-meltdown world of ours, buying a home that the owner wasn’t able to pay for anymore has become a lot more common, and so have all of the different terms and options related to those sales: short saleforeclosuredeed in lieu and REO properties.

In this week’s First-Time Home Buyer Q&A Google Hangout, we talk about REO, or real estate-owned, properties – specifically how to buy one that is owned by the Department of Veterans Affairs (VA). But let’s take a step back first and look at what an REO home is.

What Does REO Mean?

REO refers to a home that the homeowner lost in foreclosure. If the lender who foreclosed on the home can’t sell the property at a foreclosure auction, then the lender takes over ownership of the home. The lender then tries to sell the real estate-owned property to minimize their losses.

Buying an REO home can be a good idea because they’re usually priced low because the lender wants a hassle-free process and hopes to create some competition between buyers. However, these types of homes often need repairs, and the lender usually won’t pay for any of the work because they don’t want to spend any more money than they already have on the home. So, you can get it for a lower price, but you might have to spend a lot of money fixing up the home.

Buying an REO Home

Because you’re dealing with an institution and a property that was taken in foreclosure, it can be more of a hassle to buy an REO home than one owned by an individual, and that’s what we cover in this first-time home buyer video segment. Someone was having trouble buying a home that was taken over by the VA and asked how to proceed. Mark Connors, lender liaison for the VA Loan Guaranty, says that if you’re having trouble, or just have questions when trying to purchase a VA REO property, you can contact him at

You can also watch the video here!


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This Post Has 12 Comments

  1. Hi I am a Veteran with a C.O.E,, a credit score of 650+, have a good monthly income, from V.A.D. and S.S.D.I, also attended First Time Home Buyer Class and have my certification good for one year. R.E.O. Homes in Ohio for 30 year my Dad ran a remodeling company, so fixing up a place is not a problem, I’m confused on which way to go, buy out-right V.A, no money down, Rent to own option, or go REO, problem,is reo home will not qualify for a mortgage, I’ve been in quite a few, and as you stated a lot are run down and the lender don’t even want to invest in the property, I was told a house of this nature has 2 factors to look at, (1. is the house sound – cracks, broken windows, roof leaks, or about to collapse etc. 2 is the property safe, sinkhole,flood zone, exposed wiring, no plumbing, this is the first thing the inspector or appraiser is going to look at, he reports back to the lender yea or nay, and these people have to be paid for their services, so guess who pays, I’m stuck on which way to go, I’m ready looking for a good dream, not a nightmare! Help!!!!!!

  2. I would like to buy a REO.. Plenty in my is 565. Cause if oilfield slump… Husband and I would like to start flipping properties. Need our foot in the door. How do we do this. Have No Money of Our Own..Just want a Home.. Lost twenty years of retirement with Enron. Thank You.

    1. Hi Sherry:

      Sorry to hear about your retirement fund. Regarding getting a mortgage, you’ll need to get your credit score up to 580 before you can be approved for an FHA loan. You’ll also need some money for a 3.5% down payment. There’s a potential for that to come from other sources, but the down payment is something to keep in mind. I’m going to have someone reach out and go over this with you.

      Kevin Graham

  3. Hello my name is Kathy and I live in SC, Single mom for 20 years now, I still have my baby of 4 still with me. Several years ago I had to stop working due to my back”Shriners did my surgery” but of course I was turned down for Disability & they put me on SSI !!! Anyway this past year I was diagnosed with Huntingston that my dad had, again even tho’ there’s no cure or treatment there’s nomore financial help. I’would love to have a HOME that’s MINE now I just have no idea where to start. Please help because my rent is killing me & I see so many homes that I would love to call HOME !!!

    1. Hi Kathy:

      I’m very sorry to hear about your medical situation. I can put you in touch with someone to help you look into your options. They’ll be reaching out.

      Kevin Graham

  4. We are a young family looking to buy our first home. I see hundreds of REO foreclosed in my area and was wondering if this is a good option for us. Unfortunately we don’t have great credit but we could make a reasonable down payment. I have been doing research and would be so grateful for more information.

    1. Hi Jacquelyn:

      REO properties are definitely an option. One thing to consider is that to get a mortgage, you’re most likely going to need a credit score of at least 580, but I’m going to have someone reach out to you with more information.

      Kevin Graham

  5. already live in a REO Property, which was first a reverse mortgage to my now deceased mom. The reverse mortgage was processed in 2007. My mom died in 20012. I was pre-qualified to purchase at short sell in 2013. I was denied due to problem with getting on title. Later on finding out that my sister was still on the deed and was forced by an attorney that represented the reverse mortgage to sign deed over to the bank. Or she would be responsible for the mortgage and stated that they will garnish her wages. My sister explained to the reverse mortgage rep, that she had no knowledge of her name being on the deed, for she had already sign a form from the reverse mortgage to take her name off of the deed. after being harassed by the bank’s rep., she felt forced to sign a ratification form to sign over the deed. ( in 2013) Which later was found to be fraudulent according to a law firm that was representing her case. Unfortunately my sister ignorantly file for bankruptcy during this investigation. She filed chapter 7 which of course put in the hands of the trustees. At this point the reverse mortgage rep. settled for 50,000 dollars. P.S. I’ve been living in this property for over 30 yrs. Which was bought and owned by my now deceased parents; until my mom decided to get a Reverse Mortgage. And just recently my son who lives with me is now paralyzed. How can I keep this property

    1. Thank you for your comment, Teace. I’m going to have a home loan expert reach out to you with an email. They’ll look at your situation and see what we can do.

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