What does the term Real Estate Owned (REO) property refer to?

The term Real Estate Owned (REO) property specifically refers to properties that are owned by lenders after they have gone through the foreclosure process. When a borrower defaults on their mortgage, the lender may initiate foreclosure proceedings, resulting in the bank or lender taking possession of the property. After this process, the lender becomes the official owner of the property, which is then categorized as REO.

Recognizing REO properties is essential in real estate as they are often sold at a lower price than market value due to the lender's need to liquidate their assets. This unique status can provide opportunities for investors and homebuyers alike who are interested in purchasing properties that may have been through financial difficulties.

Other choices, such as properties listed for sale, those owned by individuals, and properties waiting for auction, do not accurately capture the specific definition associated with REO. These terms refer to different stages or statuses of real estate, but REO specifically denotes the ownership of properties by lenders post-foreclosure.