Real estate owned (REO) is a term used to describe a property that is owned by a lender after it has been repossessed and not sold at a foreclosure auction. When homeowners default on their loans, the bank takes possession of the property and attempts to sell it. Typically, banks become the owners of foreclosed properties when they fail to sell at a price that covers the outstanding loan amount. These properties are often available at a significant discount but might need substantial repairs.
