What does "REO" stand for in real estate?

The term "REO" stands for "Real Estate Owned," which refers to properties that have gone through the foreclosure process and are now owned by a bank, lender, or other financial institution. After a property is foreclosed upon—usually because the owner defaulted on their mortgage—it is often not sold at the foreclosure auction. Instead, the lender takes possession of the property and lists it as REO.

Understanding REO is vital for real estate professionals as these properties often represent opportunities for buyers looking for investment deals or homes at lower market prices. Banks are typically eager to sell REO properties to recover lost funds, making them attractive to buyers and investors.

The other choices, while they may seem plausible, do not accurately capture the meaning of "REO" in a real estate context. "Real Estate Owner" and "Real Estate Obligation" do not reflect the common practices or terminology of the industry, while "Real Estate Option" typically refers to a different type of agreement in real estate investing.