Real Estate Owned (REO)

What Does “Real Estate Owned” or "REO" Mean In Real Estate?

The term “REO” stands for “real estate-owned home” and commonly grouped together with "bank owned." These are homes that have been foreclosed on by banks or lenders. The banks or lenders now own and wish to sell the home. Once the home has gone through the foreclosure process, the bank has two options for selling it. The first option is to put the home on the market with a sign that states “bank-owned.” This will alert potential buyers that the owner is the bank, and it wants to sell the home sooner rather than later. If the home fails to sell through this method, the bank may decide to put it up for auction. In this scenario, it would be sold to the person who has the highest bid. The banks and lenders owning these properties know going into this situation that they will take a large price reduction on them. For this reason, it is possible to purchase REO homes for below market value. If the home is in an auction, the opening bid will usually be priced low. If you are interested in purchasing an REO, be aware that these homes are usually in poor condition and need a lot of work. REO homes are usually sold “as is.” The amount of work needed to repair each of these homes will differ. Buyers should tour the home before putting in an offer to see if the work that is required is something that they can handle. If you have your heart set on purchasing an REO, you will want to approach the bank or lender who owns it with a strong and clean offer. Your offer should have few -- or, better yet, no -- contingencies included. You should also have a large earnest money deposit, which shows that bank that you are serious about the purchase. And finally, you should not make any requests for the bank to pay any of the closing costs. Related real estate articles on Real Estate Owned or REO:
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.