What defines REO properties?

REO properties, or Real Estate Owned properties, are defined as those that are owned by lenders, typically banks, after they have gone through the foreclosure process. When a homeowner defaults on their mortgage and the property is foreclosed upon, the lender takes possession of the property. If the property does not sell at the foreclosure auction, it becomes part of the lender's portfolio as an REO asset.

This classification is important in the real estate market because REO properties are often sold below market value as lenders seek to recover losses from non-performing loans. Investors and homebuyers often pursue these properties for potential bargains, as they can sometimes require significant repairs and may be sold in as-is condition.

The other options do not align with the definition of REO properties. Properties under construction refer to buildings that are still being built and have not yet reached a completion stage. Properties owned by real estate agents would suggest a personal or business ownership unrelated to the foreclosure process. Lastly, properties listed for sale by owners are typically sold directly by the current homeowner without involving financial institutions, which is contrary to the concept of an REO property being owned by a lender.