What is an REO? REO means Real Estate Owned. Everyone is talking about REOs these days. But before you consider buying one, there are a few things you should know about REOs. These properties are generally owned by banks, credit unions, mortgage companies and sometimes private companies.

News and reports about foreclosed properties are becoming common nowadays and the opportunity to market REO are increasing dramatically. Almost everyone is trying to get their hand on an REO and tries selling them.

It's good to purchase REO as they are priced lower than the market value. However, you need to work your way in order to get your hand on these properties and avail a much lower purchase price.

It's more likely for a buyer of REO property to get a lower price during pre-foreclosure or auction stage. After the foreclosure process, the REO owner is not allowed to make a profit.

Foreclosure is the process of the lender, may it be a bank or mortgage company, to sell the property in an auction known as Public Sale. And if the property does not sell during the process, the lender keep possession of the property.

After foreclosure and when banks get hold of the properties, they would likely want to sell these properties fast to avoid losses incurred in possessing the properties.

REO properties are sold in "AS IS" basis and it's advisable to inspect the property before making the final offer. You need to get the services of a qualified home inspector who can assess the cost of repair needed for the property. You may use the assessment to backup your offer to the bank.

A more efficient way to acquire REO properties is to purchase them from private real estate investors who specialize in purchasing bank owned property portfolios. These investors buy in bulk at wholesale pricing and can pass their savings along to you.