When a property fails to promote at public sale, it reverts to financial institution possession—turning into what’s generally known as an actual property owned (REO) property. For traders, REOs usually signify a possibility to amass distressed property at probably favorable phrases.
The newest August 2025 information from ATTOM Information Options reveals a pointy enhance in REO exercise nationwide, signaling that extra properties are making their approach via the foreclosures pipeline and again into the fingers of lenders. For traders, this surge might imply expanded entry to discounted stock, but additionally the necessity for cautious due diligence.
The Numbers: August 2025 REO Exercise
Nationwide, 4,077 REO properties have been recorded in August 2025, up 5.46% month over month and a putting 41.12% yr over yr. This bounce underscores the rising variety of distressed properties banks at the moment are wanting to dump.
Breaking down the numbers additional:
- Texas: 476 REOs, a 186.75% YoY enhance—the only largest state-level surge.
- North Carolina: 151 REOs, up an astounding 112.68% YoY, displaying a dramatic pipeline shift.
- California: 343 REOs, a 49.78% YoY enhance, reflecting rising strain in a high-priced housing market.
- Florida: 276 REOs, up 36.63% YoY, reinforcing its place as one of many nation’s main foreclosures markets.
- Ohio: 142 REOs, a ten.08% YoY enhance, regular however extra modest in comparison with the sharp features seen elsewhere.
Why Buyers Ought to Care
REOs are distinctive as a result of they signify a stage the place financial institutions—rather than house owners—control the property. That dynamic usually creates an surroundings the place lenders are motivated to liquidate property rapidly, generally at discounted costs.
For traders, this implies:
- Negotiating with banks as an alternative of distressed house owners, decreasing emotional variables.
- Entry to properties which will already be listed via conventional brokerages or REO departments.
- Alternatives to combine acquisitions into tax-advantaged constructions, corresponding to self-directed IRAs, with out the time constraints of public sale bidding.
Investor Alternatives With REOs
Whereas each REO comes with dangers—corresponding to potential restore wants or unresolved title points—they could additionally present compelling alternatives:
- Discounted purchases: Banks usually want to dump REO properties rapidly, creating the potential for below-market acquisitions.
- Conventional due diligence: Not like foreclosures auctions, traders can usually conduct inspections, order value determinations, and carry out full title checks previous to buy.
- Financing flexibility: REOs could also be simpler to finance in comparison with public sale properties, together with the usage of IRA Energy Loans or non-recourse loans when investing via retirement accounts.
- Much less competitors: In comparison with pre-foreclosure or public sale phases, REOs might face fewer bidders, significantly in area of interest or secondary markets.
State Highlight: The place REOs Are Rising
Analyzing state-level information highlights why REOs are more and more essential for traders.
- Texas: With practically 500 bank-owned properties in August and a staggering 186% annual enhance, Texas could also be floor zero for REO alternatives. Buyers specializing in rental development markets corresponding to Dallas, Houston, and San Antonio might discover an expanded pool of stock.
- North Carolina: The 112% year-over-year enhance means that even fast-growing markets like Raleigh and Charlotte aren’t resistant to misery. Buyers right here might discover discounted properties in each suburban and concrete areas.
- California: With 343 REOs recorded in August, California’s surge signifies that elevated residence costs and affordability challenges are contributing to foreclosures completions. Savvy traders might goal ZIP codes with concentrated REO exercise for acquisition alternatives.
What It Means for Actual Property Buyers
The rise in REOs signifies that extra distressed properties are making it via the whole foreclosures cycle. For traders, this will translate into better availability of discounted property—properties that may probably be rehabbed, rented, or held for long-term appreciation.
Nevertheless, with alternative comes the necessity for diligence:
- Many REOs require vital repairs, making correct rehab budgeting vital.
- Title points should still exist and ought to be resolved previous to acquisition.
- Whereas banks could also be motivated sellers, competitors amongst traders stays a think about fascinating markets.
For these investing via a self-directed IRA, REOs additionally provide the potential to amass properties in a tax-advantaged surroundings—whether or not for rental earnings, long-term appreciation, or future resale.
The Strategic Benefit of Information
This surge in REOs reinforces the significance of monitoring foreclosures information throughout all three phases: Begins, Notices of Sale, and REOs. By monitoring the place bank-owned properties are being constructed, traders can:
- Determine ZIP codes with clusters of REOs
- Examine native REO development charges in opposition to state and nationwide averages
- Anticipate the place banks could also be most motivated to liquidate stock
Think about recognizing a county in Texas the place REOs have doubled quarter over quarter. That perception might give traders a bonus when approaching financial institution REO departments or monitoring MLS listings tied to distressed stock.
Take Management of Your Funding Technique
The August 2025 surge in REOs highlights an essential fact: Profitable traders don’t simply react to market headlines—they monitor information constantly and place themselves early.
With Fairness’s Foreclosures Studies, powered by ATTOM Information Options, you’ll get month-to-month updates on Foreclosures Begins, Notices of Sale, and REO properties—sortable all the way down to the ZIP code stage—so you possibly can determine alternatives earlier than the remainder of the market catches on.
Subscribe immediately for simply $19.95/yr for a single state, or $69.95/yr for the whole nation. Go to our Actual Property Studies Web page and click on to view the Foreclosures Studies to start out monitoring foreclosures information now.
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