Homes reverted to REO with below market price?

Bank owned houses are pretty much everywhere right now. It's a common phenomenon that owners bought at the hype went under water and could not afford mortgage anymore (or chose not to). They went default and bank took back the house, normally around how much owners still owed on the mortgage.

Occasionally, I saw homes reverted with a way below market price, and I could not but wonder why? Why wouldn't the owner just sell the house? If they sell the house, they could actually pay off the mortgage and possibly even gain some money, instead of trashing the credit and walk away from a profitable home. So what were the reasons that prevented them from doing so?

A few that I could think of are :

1. They had hopes that things would work out miraculously and they would be able to keep their homes.
   
2. They were in denial that they refused to recognize selling house was even an option. They only believed in staying, and 'see what we will see'.
3. They somehow believed that they may be able to get back the home even after auction or after ownership reverted. (CA does not have redemption period though)
   
4. They were deeply stressed or depressed that they had no motivation or energy to do/plan anything proactive, they became passively waiting for whatever outcome
5. They hoped to work things out and mistakenly thought (or were told) banks would give them more time. When they realized it's not going to work out, it's already too late to sell
   
6. They didn't know what to do. Staying one day is one day. After all, there were homes that were foreclosed for over a year and owner still lived there, rent free!
7. They didn't know the market price, they were disconnected from reality;
   
8. they didn't know where to sleep if they really sold the home, too much anxieties when considering the unknowns;
   
9. They owed other big debts as well, so they filed bankruptcy and didn't care anymore

What else... hmm...

10. First lender got the house, second lien was wiped out, which made it appear as if the house was reverted to bank with much lower than market price. Owner tried short sale previously but second lien holder refused to make a deal.

We do believe in miracles, but I guess we all agree miracles don't happen that often, otherwise they won't be called miracles, right? Perhaps it's better not to lose the ability to act upon situations? Perhaps it's always good to have back up plans?