Bank Owned Properties, also known as real estate owned (REO) properties, are properties that are taken into a bank’s inventory, after a foreclosure sale.
Bank-owned property are acquired by a financial institution when a borrower does not make their mortgage payments. These properties then sell at a discounted price, much lower than current home prices.
This type of property is taken back by lenders during foreclosure. Lenders and banks with the highest bid in a foreclosure gain the rights to obtain the property.
Bank-owned properties tend to have low interest rates and low down payments. Large national lending institutions have departments called loss mitigation departments, that sell these properties.