R.E.O. stands for "real estate owned", and is the term banks and other real estate lenders use to describe property that they have already completed the foreclosure or "deed in lieu" process for, and now hold clear title to in what they call their "REO portfolio". Because banking laws require banks to hold certain amounts of cash reserves on hand for different situations, the cost to a bank or real estate lender to hold a property in their portfolio can be much greater than the dollar value of the property itself, as they often are required to retain in cash 2 or three times the value of each property they hold title to. Thus, many properties can be purchased well below market value from a bank "REO portfolio" that needs to get it's liquidity back to acceptable levels.
