What is Real Estate Owned (REO) property?

Real Estate Owned (REO) property refers specifically to properties that are owned by a lender, typically a bank, after they have been through the foreclosure process. When a borrower defaults on their mortgage and the property goes through foreclosure, the lender attempts to sell the property at an auction. If the property does not sell at auction, it reverts to the lender's ownership, thus becoming classified as REO.

REO properties are often sold directly by the lender to recover the outstanding loan balance. These properties may require repairs or renovations, as they are frequently sold "as-is," which reflects their condition after being through the foreclosure process. This classification helps buyers understand that the property has an owner (the bank) that is trying to sell it to recover losses, distinguishing it from properties simply facing unpaid taxes or those designated as investment properties.