An REO stands for real estate owned is often in mediocre to poor condition and investors pick up the properties often in hopes of remodeling and reselling or renting to regain the money spent on the properties. Investors have a higher chance of turning a profit, because the nature of investing is time. Banks, on the other hand, have no time to hold on to the home and no means through which to modify the home for a quicker sale. Investors, on the other hand, are happy to lift the property from the bank at the heavy discounts being offered. Real Estate REO sales are rarely, if ever purchased by individuals. Once a property enters REO status, the bank just wants to get rid of the property as quickly as possible and is often only willing to sell to a cash buyer like a real estate investor or large company. On rare occasions, the banks will be willing to sell a home or two off of a larger lot if the buyer has an approval from another lender ready for the deal upon the introduction of the sale contract.

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