What does REO stand for in real estate terminology?

REO stands for Real Estate Owned, which refers to property that is owned by a lender, typically a bank or other financial institution, after an unsuccessful sale at a foreclosure auction. When a property fails to sell during the foreclosure process, it becomes part of the lender's inventory, thus categorized as REO.

This designation is significant in real estate as it indicates that the property is now under the ownership of a lender rather than a previous owner or seller. Lenders often seek to sell these properties to recover losses associated with the non-performing loans that resulted in the foreclosure. The management and sale of REO properties become a part of the lender's portfolio, and they may employ strategies to market these properties effectively to potential buyers.

Understanding the term REO is crucial for professionals working in real estate, as it influences property valuation, marketing strategies, and negotiations. It also plays a role in the broader financial context, particularly in relation to the real estate market and bank asset management.