REO means: Real Estate Owned. Generally, this is a term commonly used in reference to bank-owned properties or properties that have been foreclosed.
More specifically, these are properties that revert to the lender after the borrower defaults on the loan. The process is complex, but in the end the lender takes the property back and there is no longer a loan, hence Real Estate Owned.
When I first started in real estate, I thought that REO meant Real Estate Owed. At least that’s what I heard, and it didn’t make any sense. I couldn’t figure it out no matter how my broker explained it to me. What a difference one little letter can make. If only I owned everything I owe.