REO properties have been foreclosed on and have been taken back by the mortgage lender or trustee.  An REO is actually the result of an unsuccessful foreclosure, as a buyer for the property could not be found during the foreclosure sale on the courthouse steps, thus the bank is forced to repossess the property.   These REO properties are typically sold separately via real estate brokerage firms.

In today’s heavily flooded foreclosure market, there is often no major problems with an REO property, other than the fact that its owner could no longer afford the payments.  The original owners misfortune can lend savings to a future buyer of up to 20%.  REO properties are also First Time Home Buyer friendly, with banks offering significant seller concessions to the buyer in the hopes of brokering a quick sale.  REO properties are sold as-is, yet buyers are given access to home for inspections and appraisal purposes.  There are also no back taxes, liens, or tenants to worry about evicting.  To put it simply, REO sales offer buyers significant savings with very little risk.

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