REO

Short for "real estate owned" (home), 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) 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 with the bank that owns the property and try to put together the "cleanest" offer possible. Clean means few contingencies, a high earnest money deposit and no requests to the bank to pay for closing costs. Banks are dealing with huge numbers of these homes and prefer offers that involve the least hassle.