Have you ever come across the term PPO and REO and wondered what the terms mean and how the two concepts are related to real estate? Well, worry no more, this article answers your question of What does ppo mean in real estate by explaining the concept in depth and comparing it with REO.
Essentially, PPO properties are those which are repossessed by a bank and are in the foreclosure process but are yet to fall under REO status. In contrast to PPO, REO refers to Real Estate owned foreclosure. Therefore, PPO can also be defined as a Pre-REO.
On the other hand, a PPO property is still legally owned by the owner while a property with an REO status means that it the bank owns the property. In layman terms, an REO is a foreclosed property that is repossessed by a bank due to non-payment. The period of nonpayment before a property becomes a PPO is usually greater than 90 days. After which, a bank begins the foreclosure process with a notice of trustee sale.
Now that you are familiar with the two terms and can differentiate between the two let’s get into the more details of What does ppo mean in real estate. First, you need to know that a property has a PPO status when it is in the process of being auctioned. Secondly, for a property or asset to attain a PPO status, it means that the owner was unable to make payments and thus has an outstanding loan. Consequently, the bank repossesses the property in a bid to auction it off and recover its money. You can usually find public notices of foreclosure auctions in the local newspaper.
The auctions are usually held at properties’ locations or the courthouse. In the event a property is not sold during the auction then the bank legally repossesses the property giving it an REO status. Therefore, a property gains an REO status when a bank fails to sell a property at a foreclosure auction.
In addition, to understand What does ppo mean in real estate, you might also be interested to know that while a property has a PPO status, it is often managed by a property preservation company.
Banks work together with property preservation companies to maintain, repair and perform landscaping and lawn care services. Preservation and maintenance services of a PPO is crucial since it gives a financial institution a better chance of converting the liability into an asset.
This is because if a property is well managed, the bank stands a better chance of securing a sale during an auction.
Having answered what does ppo mean in real estate, a parting shot for this article is that when a property has a PPO status, one should be aware that the owner often is still the legal owner of the property and is not yet ready to sell and move. Therefore, one should exercise patience and due diligence when looking to buy such a property.