An REO Transaction is a real estate transaction term that refers to properties that are foreclosed and are now owned by a bank or lender. When a foreclosure property goes to auction and the bank or lender is the highest bidder, it becomes an REO property, and the bank/lender now owns the property.

A bankruptcy sale is often initiated due to default on payments to debtors. This sale is then utilized to repay those debts that have not been able to be paid off previously.

A short sale is when a homeowner owes more to their current lender than the property is worth and must be able to prove they are in a financial hardship, no longer being able to make the payments necessary. The homeowner initiates this type of sale prior to the mortgagee initiating foreclosure due to no longer receiving payments from the owner. The seller applies for this type of sale and must get lender approval to be considered for this type of sale due to being able to claim a loss. The current mortgagee may accept a lower payoff amount or take all the proceeds of the sale and place a deficiency judgment against the seller to receive the rest of the amount due.