What is an reo addendum?

Answer 1

It is an addendum to the standard form purchase and sale contract that the bank often insists on using. REO addendums will specifically state that the property is being sold "as is" (since the bank has less knowledge of the condition of the property than a normal seller would have) and it also makes it easier for the lender to back out of deals, collect penalty fees if the closing is delayed by the buyer and keep the buyer's deposit. In short, it's an addendum that puts more power in the hands of the seller than is usually there in normal real estate transactions.