What is an REO?

REO is an abbreviation for Real Estate Owned Properties.  If nobody purchases a property at a Trustee Sale, then a home becomes an REO property, owned by the bank or lender.  A main reason a home does not sell in a Trustee Sale, is because it doesn’t work out to be a good investment for a potential real estate investor.

A home that has been foreclosured and is now an REO, is listed by a Realtor who is hired by the bank to market and sell the property.  To sell the house as quickly as possible, the lender will remove any liens on the title and clear any other issues that may slow down the sale of the property.  Generally, lenders are fairly motivated to sell these properties, as they are not in the business of owning properties but instead lending money.  REOs end up tieing up captial reserves and hamper the bank or lender’s ability to lend money.  The management of these properties can become very costly and could result in a good opportunity to find a good deal.