What Is an REO Property? How to Find and Buy Bank-Owned Homes

Quick Read: Summary and Key Points

• What to know: REO properties are lender- or government-owned homes that did not sell at foreclosure auction. Title is typically clean, and sales run through standardized addenda and queues.

• Where to find them: Fannie Mae HomePath, HUD Home Store, selected bank portals, your MLS, county clerk notices, and reputable aggregators.

• How to win offers: Proof of funds or pre-approval, short timelines, complete documents, and terms that reduce friction for institutional sellers.

• First 30 days: Pick two ZIP codes, save searches, line up title and contractor, submit three complete offers by Week 3.

REO Properties 101: What They Are and Why They Matter

How REOs Happen: The Simple Timeline

1. Borrower stops making payments

2. Lender files a Notice of Default (NOD)

3. Notice of Sale is issued

4. Property goes to public auction

5. No sale at auction, lender takes possession

6. Lender lists the property for sale via REO brokers or portals

Where To Find REO Listings (Fast, Legit Sources)

• County records: Search for NOD and Notice of Sale at the county clerk site or office

• Bank portals: Major lenders maintain REO pages curated by reputable industry blogs

• Government portals: Fannie Mae HomePath, HUD Home Store, SBA inventory

• Aggregators: RealtyTrac and similar services for foreclosure and pre-foreclosure

Markets With Momentum (Watch Supply, Not Hype)

• Trenton and Newark, NJ

• Baltimore, MD

• Las Vegas, NV

• Miami and Ft. Lauderdale, FL

Before You Start: Prerequisites

• Financing ready or proof of funds

• Two target ZIP codes with a clear buy box

• Title company that handles REO

• Contractor for scope templates and quick bids

• Saved searches on HomePath, HUD Home Store, relevant bank portals, and your MLS

How To Buy An REO (Step-by-Step)

1. Get pre-approved or prepare proof of funds

2. Work with an agent familiar with REO addenda and timelines

3. Identify properties, analyze comps, and estimate repairs

4. Submit offer and expect counters and multiple bids

5. Order appraisal and inspections

6. Run a full title search for liens or clouds

7. Close per the seller’s process and required addenda

Negotiation Checklist

• Price anchored to comps and condition

• Short inspection period and clear financing timeline

• Complete offer package: proof of funds or DU/LP, required addenda signed

• Repair expectations: as-is with your contingency plan

• Communication cadence: confirm receipt and follow queues weekly

People Also Ask: Quick Answers

• What is an REO property? A lender- or government-owned home that did not sell at foreclosure auction.

• Are REO homes sold as-is? Typically yes. Budget for deferred maintenance and require inspections.

• Do banks negotiate on REO? Yes, within policy. Clean terms and complete packages help acceptance.

• Can I finance an REO? Yes. Conventional and FHA can work when condition qualifies.

• Where do I find REO listings today? Fannie Mae HomePath, HUD Home Store, select bank portals, your MLS, and county records.

Checklist: Your First 30 Days in REO

• Week 1: Choose two ZIP codes, set saved searches, line up title and contractor

• Week 2: Pull last-90-day REO comps and DOM, prepare repair scope template

• Week 3: Identify six targets, submit three offers with full packages

• Week 4: Negotiate counters, order inspections, refine offer checklist

Glossary

• REO: Real Estate Owned by lender or agency

• NOD: Notice of Default, formal start of foreclosure

• REO Addendum: Seller’s required terms for the transaction
Become the REO authority in your market. Get the scripts, outreach templates, and deal review checklist in our Defaults Digest intro kit: Start here.