REO (Real Estate Owned) properties are those that have either gone through the foreclosure process and are now owned by the lender, usually a bank or financial institution or are pre-foreclosure and the bank has not completed the foreclosure sale process. Either way, the bank owns the property.
Foreclosures are properties the lender has taken back through the legal process due to the homeowner's inability to keep up with mortgage payments.
Pre-foreclosures are properties that are in the early stage of the foreclosure process. The homeowner has fallen behind on mortgage payments, but the lender has not yet completed the foreclosure process. (Tony PO Staff)