REO's

What does REO mean? Real Estate Owned and it refers to a bank that owns the real estate. This means that the home has been foreclosed on and the bank now owns the home. Banks are not in the real estate business and want these homes sold as fast as possible. They want to recover as much as they can when selling an REO so most of the time there is a deal to be had.
Still, don't be fooled into buying and REO and then finding out that you paid more than the house is worth. Remember many of these homes were financed 100% when the market was high. Now the home is not worth what the principal of mortgage was when the homeowners defaulted. Most of the time the bank is writing off a lot of the debt therefore you and find great deals on REO's for sale.
It would really be worth your while to have a reputable real estate agent work with you to determine the comps in the area you are looking to buy. Many auction companies even let you bring your realtor to the auction.
So REO's can be a great way for first time buyers and investors to find reasonably prices homes. But don't forget to do your homework before making an offer to the bank.