What could be a reason for a seller to choose to list their property as REO?

Listing a property as Real Estate Owned (REO) is specifically related to properties that have been foreclosed and are owned by the lender, typically a bank or financial institution. Once a homeowner defaults on their mortgage, the lender takes possession of the property through the foreclosure process. After foreclosure, if the lender is unable to sell the property at auction, it becomes part of their inventory and is classified as REO.

This classification signals to potential buyers that the property is bank owned and may have different considerations compared to other listings. For instance, buyers might expect that the lender will be looking to sell the property at a price that reflects its current state, often leading to competitive pricing in a buyer’s market. If the other options were considered, they would not accurately depict the nature of an REO property. For example, a property in excellent condition is unlikely to be in bank ownership as it indicates a well-maintained home that has not gone through foreclosure. Similarly, a seller facing bankruptcy or a property with a pending sale would not fit the criteria for an REO classification.