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

Real Estate Owned (REO) property specifically refers to bank-owned real estate that has gone through the foreclosure process. When a homeowner defaults on a mortgage and the property is foreclosed upon, the lender takes possession. If the property does not sell at a foreclosure auction, it reverts to the bank, becoming classified as REO.

This classification is significant because it indicates that the property is now owned by the lending institution and can be sold through various channels, including real estate agents or as part of an auction. Understanding REO is crucial in navigating the implications of foreclosure and the real estate market, as well as identifying potential opportunities for buyers looking for properties that may be priced below market value.

The other options do not accurately define REO. Properties held by tenants, those still under construction, or commercial properties for lease are all distinct categories that do not involve ownership by a bank after foreclosure, which is the defining characteristic of REO properties.