What is an REO

REO stands for Real Estate Owned. They are properties that have underwent foreclosure and have returned to the Lenders after having failed to be sold at auction. For banks, REO properties are liabilities and must be cleared as soon as possible. The main reason for the selling of REOs is to minimize Lenders' losses as seen with Short Sales; they want to sell REOs in the shortest amount of time (within ninety days) for the highest reasonable price possible.

 

REO vs. Short Sales

REOs, unlike short sales, do not take on average 6-8 months for the transaction to be complete. Reason is that there's neither tedious negotiation involved nor the attempt of trying to prove a Homeowner’s financial hardship. The property has reverted back to the bank with no liens and encumbrances on the property (clear title). There’s far less paperwork and disclosures involved in REOs as opposed to Short Sales. Most REOs on average, are able to closed within ninety days.