Bank Owned Property – A bank owned property or REO (Real Estate Owned) is a property that has been purchased back by the bank.  Typically, it is either signed back to the bank by the borrower, or sold at public auction.  In the later case, the sale price is at or below what is owed on the property. Once the bank owns the property, it will establish a value based on multiple BPOs (Broker Price Opinions), and then list it with an agent who specializes in REO properties.  These properties are sold AS-IS, are clear of any liens and transfer via a special warranty deed. They can often be purchased below fair market value, giving the buyer the benefit of instant equity, but once you buy it, you own it--bumps, bruises and all.