When you see a property identified as a "real estate owned foreclosure," it means first of all that the lender has taken the house back from a borrower who failed to make the payments. That's the foreclosure. The "real estate owned" part means the lender hasn't been able to find a buyer for the house.
What is 'Real Estate Owned - REO'
Real estate owned, or REO, is the name given to foreclosed-upon real estate, such as detached houses, condominiums, townhomes and land, in a bank's portfolio. Such properties end up in bank portfolios after unsuccessful sales at foreclosure auctions. A bank takes ownership of a foreclosed property when no bidder offers the amount it seeks to cover the loan.