Real Estate Owned (REO) is a term used to describe a property that did not sell at a foreclosure auction and is now owned by a mortgage lender, bank, or investor. When a property goes into foreclosure, a foreclosure sale is held on a specific date for a specific price. If there is no successful purchaser of the property, the lender or the investor on the loan takes over management of the property. If the property fails to sell at the specific price, it becomes REO inventory.

REO properties are sold "as is" and often discounted to sell as quickly as possible. The big benefit of buying an REO property is that lenders and major mortgage investors are trying to get something out of a property that has been foreclosed on and hasnt sold at auction. This could mean that theyre often much more flexible on cost, and buyers may get a great deal.

To finance an REO property, the most popular way is the same way as financing a regular home purchase, with a mortgage. However, buyers should be aware that REO properties are sold "as is," so if anything is damaged or gets damaged during the sale, its on the buyer to make these repairs.

Overall, REO properties can be a cost-effective option for buyers looking to save money and willing to make a few repairs.