What does the term "REO" indicate about a property?

The term "REO," which stands for Real Estate Owned, specifically indicates that a property has gone through the foreclosure process and is now owned by the lender, typically a bank or financial institution. After a property fails to sell at a foreclosure auction, the lender takes possession of the property and it becomes part of their asset portfolio. This status is significant as it often reflects certain conditions such as the lender's motivations for selling and the property’s potential price adjustments to make it marketable.

Understanding this term is crucial for real estate professionals, as it informs them about the nature of the property, its current ownership, and potential strategies for sale. The other options relate to different concepts: government-owned properties do not equate to REO, investment purposes do not necessarily apply to the broader category of REO properties, and outstanding liens do not define the REO status. Therefore, recognizing that REO properties are specifically those owned by a lender after foreclosure is fundamental in real estate transactions.