What Is Real Estate Owned (REO)?
The term real estate owned (REO) refers to a lender-owned property that is not sold at a foreclosure auction. Properties become REO when owners default and the bank repossesses them and tries to sell them. The lender, which is often a bank, takes ownership of a foreclosed property when it fails to sell at the amount sought to cover the loan. These properties generally come at a steep discount but may require extensive repairs.
KEY TAKEAWAYS
- Real estate owned is the term for a property owned by a lender because it failed to sell in a foreclosure auction after the borrower defaulted on their mortgage.
- Banks attempt to sell their REOs using a real estate agent or by listing the properties online.
- REO specialists may be involved to try to get more exposure for the properties.
- REOs are often sold at a discount by banks and other lenders
- They are usually sold as is and are often in disrepair.
