Many of you have probably heard the term REO's but few understand or actually know how important these types of real estate transactions can be when looking for a great deal.

REOs are Real Estate Owned properties, meaning that the bank or lender that originally underwrote the actual mortgage have foreclosed on the property and are now taking it upon themselves to sell the property to the public. 

In a standard foreclosure process - the bank or lender will offer the property up for auction at the courthouse steps.  If a bid is not high enough, or no bids are received at auction, the bank will in effect buy back the property that they originally lent money on.  The amount of their purchase will equal the original amount of money lent.  Once they receive the property back it is called an REO property. 

Bank REO properties can be found within most of the major bank websites and a simple search engine query will return more than enough results to get you started. 

So when starting to peruse for a great deal - don't miss the banks REO departments.

Doug,
I couldn't agree with you more about REO properties. The benefit to the buyer is that banks and mortgage companies are not in the business of owning homes. Therefore, they are typically anxious to sell the home they have foreclosed on and will sell it for far below market value.

Doing your own search for REO properties can be helpful, but engaging a real estate professional can be even more effective. An agent experienced in REO transactions can help you find a property quickly, negotiate on your behalf with the bank and bring the transaction to a successful close.