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To simplify the term REO, it is a Real Estate Property owned by banks or financial institutions. Usually a group of houses.

Selling REO can be a direct selling where in it is offered to a buyer or investor or they sell it through auctions.

But most of the time the selling the property through auctions is a disappointment. No one would want to buy properties on auctions because the lender usually is not satisfied with the bid or amount.

Putting properties on REO status is what most banks are doing if the lender are not able to close the deal in auction sales. this way they could sell the property easily and get away with too much cost on up keeps of the property.

Large real estate companies are the ones buying REO’s. They get the properties on a low price but gets more profit by reselling the property at a high price.