REO (real estate owned)

Property a lender took back, usually because no one outbid it at the foreclosure sale.

REO stands for "real estate owned." It's the label for a property a lender ends up owning after a foreclosure, usually because nobody bid more than the lender at the sale.

At a foreclosure auction the lender doesn't have to bring cash. It can bid what it's owed, which is called a credit bid. If no outside bidder beats that number, the lender wins and the property goes on its books as REO. The trustee's deed (Texas and California) or certificate of title (Florida) names the lender or its investor as the new owner.

From there, the lender usually deals with anyone still living there, takes care of the title and lists the property for sale, often through a real estate agent and sometimes at an online auction.

For investors and agents, REO is the next chance at a property that didn't sell at auction. It's usually sold as is, but the seller is a lender rather than a distressed owner, and there's normally time for inspections and financing that a foreclosure auction doesn't allow.

Watching sale results tells you which properties became REO: when the deed or certificate is recorded, the buyer's name answers the question. See how sales work in Texas, Florida and California.

All glossary terms

General information, not legal advice. For your own situation, talk to a lawyer.