In spite of my indignation at the word “repo” they won’t stop using it. So maybe I’m the odd one out. I just contend that cars get repossessed. Homes get foreclosed. So yes, a “repo” (ugh!) is the same as an REO, which stands for Real Estate Owned. By a bank.

Banks don’t like owning homes, by the way, in case you were wondering. Banks are not in the business of real estate, banks are in the business of money. Unfortunately, when someone stops making payments on a house, they are forced to foreclose, a process by which the home is sold at a trustee’s sale. If the home continues to remain unsold, it gets added to the other homes the bank may have called REOs. These eventually find their way to the open market, where they are sold at usually deep discounts.

There are a number of REOs on the market today, which in turn have led to the drop in home prices. The major drawback of a REO is that it is always an as-is sale and the buyer has to be exceptionally vigilant about getting all inspections done. But the price you pay for one almost always makes it worth it.

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