REO (Real Estate Owned)

Real Estate Owned (REO) refers to property that has been taken back by a lender, bank, or loan servicer after a failed foreclosure auction — i.e., a property where the highest bid did not meet the lender's minimum (usually the outstanding loan balance plus costs). REO properties are then managed and eventually sold by the lender's asset management division or through REO brokers.

Texas Context

In Texas, if no third party bids above the lender's opening bid at the First Tuesday auction, the property 'reverts' to the lender as REO. REO properties can be purchased directly from the bank — often at a discount, but well after the auction window has passed. Pre-foreclosure monitoring (which Foreclosures Now provides) gives investors the opportunity to acquire these same properties at even greater discounts before they ever reach the auction, by negotiating directly with the homeowner during the 21-day posting window.