A "Real Estate Owned" (REO) property is a property owned by a lender, usually a bank, after an unsuccessful sale at a foreclosure auction. A bank will often set the opening bid at a foreclosure auction for at least the outstanding loan amount. If there are no bidders, then the bank will legally take the property. As soon as the bank repossess the property, it becomes a REO, Real Estate Owned, property on their books and is categorized as a non-performing asset. These REO properties may provide you with a great value if you take the time to research them.