Real Estate Glossary > R > REO (Real Estate Owned Home) Definition

Short for "real estate owned," REOs are foreclosed homes owned by banks and lenders. Banks either withhold from releasing these properties on the market because they don't want to take a loss or list them in the Multiple Listing Service (MLS) A local or regional service that compiles available real estate for sale by member brokers along with detailed information brokers and agents can access online. represented by an agent. REOs are often priced below market value to create bidding wars among buyers. REO properties can still be a great deal, but buyers should know that REOs may need repairs and banks will rarely cover these costs. When looking at purchasing an REO, buyers should get pre-approved A letter from a bank or a lender estimating how much they'll lend a borrower. Getting pre-approved for a loan helps establish a price range and determines how much the borrower can afford. with the bank that owns the property and try to put together the "cleanest" offer possible. Clean means few contingencies Conditions included with an offer on a home that must be fulfilled before the deal can close. If a buyer or seller is unable to satisfy a contingency, then the offer on a home may become void. , a high earnest money deposit The money buyers pay one to three business days after agreeing with the seller on a price for the home to show that they're serious about the offer. and no requests to the bank to pay for closing costs. Fees incurred in addition to the purchase price of a home that will be listed for both the buyer and the seller on the final settlement statement before closing. In 2009, the banks are dealing with huge numbers of these homes and prefer offers that involve the least hassle.