What are "REO" properties?

"REO" stands for "Real Estate Owned," which refers to properties that are owned by a lender, typically a bank, after an unsuccessful foreclosure auction. When a homeowner defaults on their mortgage and the lender tries to sell the property at foreclosure, if the property does not sell at that auction, it reverts to the lender. These properties are then categorized as REO.

The significance of REO properties lies in their potential for purchase, as they are often sold at a discount compared to market value due to the lender's desire to quickly recover losses from the unpaid mortgage. Investors and homebuyers often target these properties for acquisition, making them a notable aspect of the real estate market.

Properties awaiting foreclosure sale, listings for rental properties, and homes listed by homeowners do not fit the definition of REO properties, as they either involve properties that are still in the possession of the homeowner or those that have not yet been transferred to the lender post-foreclosure.