REO (Real Estate Owned)

A property owned by a bank or lender after a foreclosure auction failed to sell it.

When a foreclosed property doesn't sell at auction, it goes back to the lender — that's REO. Banks then list REO inventory through asset managers or specialized brokerages to dispose of it. REO can be cheaper than market but comes with risk: usually sold as-is, often in poor condition (vacant for months, vandalism, deferred maintenance), and the listing bank rarely negotiates much on price. Best for cash buyers and BRRRR operators with rehab budgets. The post-2008 REO wave is long over; current REO inventory is sparse.