What Does REO Mean

To simplify the term REO, it is a Real Estate Property owned by banks or financial institutions. Usually a group of houses.

REO’s are sold through auctions or directly sold it to buyers as they tagged it “bank owned”. In directly selling the property the lender usually want to speed up the selling process. but on auctions they will wait for the highest bidder. which normally flops.

Usually the lender is not able to close the deal in auctions because they are not satisfied with the bid.

Banks usually puts the property on REO status if not being able to close the deal in auction sales, they normally wouldn’t want to keep the property with them to avoid maintenance of the property which could cost them too much.

Large real estate companies are the ones buying REO’s. They get the properties on a low price but gets more profit by reselling the property at a high price.

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