What Does REO Stand For?

Discover what REO stands for in real estate and its significance. Learn how lenders deal with foreclosed properties and their impact on the market.


When it comes to real estate, the term REO is often used but not fully understood by everyone. In this article, we will explore what REO stands for and its significance in the real estate industry.

What Does REO Stand For?

REO stands for Real Estate Owned. It refers to properties that have gone through the foreclosure process and are now owned by a lender, such as a bank or mortgage company. When a homeowner defaults on their mortgage payments, the lender will take possession of the property and attempt to sell it to recoup their losses.


For example, if a homeowner fails to make their mortgage payments for a certain period, the lender will start the foreclosure process. Once the property is foreclosed upon, it becomes an REO property. The lender will then list the property for sale to potential buyers.

Case Studies

One common scenario where REO properties come into play is when investors purchase these properties at a discount and then renovate and resell them for a profit. This is known as flipping REO properties.


According to recent data, the number of REO properties has been on the decline in recent years. This is due to an improving economy and stricter lending practices, which have resulted in fewer foreclosures. However, REO properties still represent a significant portion of the real estate market.


Understanding what REO stands for is essential for anyone involved in the real estate industry. Whether you are a buyer, seller, investor, or lender, knowing the ins and outs of REO properties can help you navigate the market more effectively.

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