What Is REO?

There are broad ways of explaining REO but just to simplify the term, REO stands for Real Estate Owned. These are properties owned by banks or financial institutions most of the time it is 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.
Unfortunately even an auction sales will not satisfy the lender to agree on sale of the home and would not be able to get any bids.
Putting properties on REO status is what most banks are doing if the lender are not able to close the deal in auction sales. this way they could sell the property easily and get away with too much cost on up keeps of the property.
Then, REOs will be marketed towards investors like large real estate companies as high price cut. The lender reduces the price of the homes by removing any liens and fees associated with the pending mortgage. And most often companies like this buy the property at once. This gives them good investment they get the property on a low price and would make profit by either remodeling or reselling the property in a value they wanted to regain the money spent on the property.

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