Bank-Owned Properties Are Up 41% From Last Year—What Does It Mean For Investors?

In This Article

When a property fails to sell at auction, it reverts to bank ownership—becoming what’s known as a real estate owned (REO) property. For investors, REOs often represent an opportunity to acquire distressed assets at potentially favorable terms.

The latest August 2025 data from ATTOM Data Solutions reveals a sharp increase in REO activity nationwide, signaling that more properties are making their way through the foreclosure pipeline and back into the hands of lenders. For investors, this surge could mean expanded access to discounted inventory, but also the need for careful due diligence.

The Numbers: August 2025 REO Activity

Nationwide, 4,077 REO properties were recorded in August 2025, up 5.46% month over month and a striking 41.12% year over year. This jump underscores the growing number of distressed homes banks are now looking to offload.

Breaking down the numbers further:

Texas: 476 REOs, a 186.75% YoY increase—the single largest state-level surge.

North Carolina: 151 REOs, up an astounding 112.68% YoY, showing a dramatic pipeline shift.

California: 343 REOs, a 49.78% YoY increase, reflecting growing pressure in a high-priced housing market.

Florida: 276 REOs, up 36.63% YoY, reinforcing its position as one of the nation’s leading foreclosure markets.

Ohio: 142 REOs, a 10.08% YoY increase, steady but more modest compared to the sharp gains seen elsewhere.

Why Investors Should Care

REOs are unique because they represent a stage where banks—rather than homeowners—control the property. That dynamic often creates an environment where lenders are motivated to liquidate assets quickly, sometimes at discounted prices.

For investors, this means:

Negotiating with banks instead of distressed owners, reducing emotional variables.

Access to properties that may already be listed through traditional brokerages or REO departments.

Opportunities to integrate acquisitions into tax-advantaged structures, such as self-directed IRAs, without the time constraints of auction bidding.

Investor Opportunities With REOs

While every REO comes with risks—such as potential repair needs or unresolved title issues—they may also provide compelling opportunities:

Discounted purchases: Banks often prefer to offload REO properties quickly, creating the potential for below-market acquisitions.

Traditional due diligence: Unlike foreclosure auctions, investors can typically conduct inspections, order appraisals, and perform full title checks prior to purchase.

Financing flexibility: REOs may be easier to finance compared to auction properties, including the use of IRA Power Loans or non-recourse loans when investing through retirement accounts.

Less competition: Compared to pre-foreclosure or auction stages, REOs may face fewer bidders, particularly in niche or secondary markets.

State Spotlight: Where REOs Are Rising

Examining state-level data highlights why REOs are increasingly important for investors.

Texas: With nearly 500 bank-owned properties in August and a staggering 186% annual increase, Texas may be ground zero for REO opportunities. Investors focusing on rental growth markets such as Dallas, Houston, and San Antonio could find an expanded pool of inventory.

North Carolina: The 112% year-over-year increase suggests that even fast-growing markets like Raleigh and Charlotte are not immune to distress. Investors here may find discounted properties in both suburban and urban areas.

California: With 343 REOs recorded in August, California’s surge indicates that elevated home prices and affordability challenges are contributing to foreclosure completions. Savvy investors may target ZIP codes with concentrated REO activity for acquisition opportunities.

What It Means for Real Estate Investors

The increase in REOs means that more distressed properties are making it through the entire foreclosure cycle. For investors, this can translate into greater availability of discounted assets—properties that can potentially be rehabbed, rented, or held for long-term appreciation.

However, with opportunity comes the need for diligence:

Many REOs require significant repairs, making accurate rehab budgeting critical.

Title issues may still exist and should be resolved prior to acquisition.

While banks may be motivated sellers, competition among investors remains a factor in desirable markets.

For those investing through a self-directed IRA, REOs also offer the potential to acquire properties in a tax-advantaged environment—whether for rental income, long-term appreciation, or future resale.

You might also like

The Strategic Advantage of Data

This surge in REOs reinforces the importance of tracking foreclosure data across all three stages: Starts, Notices of Sale, and REOs. By monitoring where bank-owned properties are being built, investors can:

Identify ZIP codes with clusters of REOs

Compare local REO growth rates against state and national averages

Anticipate where banks may be most motivated to liquidate inventory

Imagine spotting a county in Texas where REOs have doubled quarter over quarter. That insight may give investors an advantage when approaching bank REO departments or monitoring MLS listings tied to distressed inventory.

Take Control of Your Investment Strategy

The August 2025 surge in REOs highlights an important truth: Successful investors don’t just react to market headlines—they track data consistently and position themselves early.

With Equity’s Foreclosure Reports, powered by ATTOM Data Solutions, you’ll get monthly updates on Foreclosure Starts, Notices of Sale, and REO properties—sortable down to the ZIP code level—so you can identify opportunities before the rest of the market catches on.

Subscribe today for just $19.95/year for a single state, or $69.95/year for the entire country. Visit our Real Estate Reports Page and click to view the Foreclosure Reports to start tracking foreclosure data now.

Equity Trust Company is a directed custodian and does not provide tax, legal, or investment advice. Any information communicated by Equity Trust is for educational purposes only, and should not be construed as tax, legal, or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional.

BiggerPockets/PassivePockets is not affiliated in any way with Equity Trust Company or any of Equity’s family of companies. Opinions or ideas expressed by BiggerPockets/PassivePockets are not necessarily those of Equity Trust Company, nor do they reflect their views or endorsement. The information provided by Equity Trust Company is for educational purposes only. Equity Trust Company, and their affiliates, representatives, and officers do not provide legal or tax advice. Investing involves risk, including possible loss of principal. Please consult your tax and legal advisors before making investment decisions. Equity Trust and Bigger Pockets/Passive Pockets may receive referral fees for any services performed as a result of being referred opportunities.