Real Estate Owned (REO): properties that revert to a lender, typically a bank, after an unsuccessful foreclosure auction are Real Estate Owned. Banks commonly become owners of foreclosed real estate because properties for sale at auctions often are worth less than the total amount owed to the bank via the mortgage. The minimum bid — the outstanding loan amount — is above market value. Banks try to sell REO properties at lower prices on their own or through an agent.
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