What Is REO in Real Estate?

REO stands for Real Estate Owned — property owned by a lender (usually a bank or mortgage company) after foreclosure. When a foreclosed home doesn’t sell at auction, it becomes REO and is listed for sale on the MLS like any other property.

🏦 How a Property Becomes REO

  • Missed payments: A homeowner defaults on their mortgage.
  • Foreclosure: The lender reclaims the property through a legal process.
  • Auction attempt: The property is offered for sale but may not attract bidders.
  • REO status: If unsold, it becomes Real Estate Owned — now held by the lender.

Once it’s REO, the bank clears liens, repairs issues, and hires a listing broker to sell it — usually through the local MLS.

💡 Why REO Properties Matter

REO homes can offer below-market opportunities for buyers and investors, but they’re sold as is and often need repairs. For FSBO sellers, understanding REO sales helps you recognize how banks list and market repossessed homes competitively — often through flat fee MLS exposure just like yours.

  • Lenders usually offer clear title and pay for certain closing costs.
  • Properties are listed on the Realtor.com and Zillow through MLS syndication.
  • REO listings follow the same offer and purchase agreement process as standard home sales.

📍 REO Insights for FSBO Sellers

Banks rely on MLS exposure, professional photos, and competitive pricing to sell REO properties quickly — strategies FSBO sellers can apply using flat fee MLS plans through Brokerless. This approach gives your property the same reach major lenders get, without paying a 6% commission.

✅ Key Takeaways

  • REO means “Real Estate Owned” — a bank-owned property post-foreclosure.
  • Listed via MLS: REO homes use agent or broker access to market widely.
  • As-is condition: Buyers accept known property issues, often at a discount.
  • Flat fee MLS sellers: Gain the same exposure strategy banks use.