How do the banks determine the pricing of their REO (foreclosed) homes?
That is a great question! I wish we knew the definitive answer. The exact formula that banks use for setting prices is unknown to us as real estate agents but we do know that they make their decision based on at least one evaluation from a licensed appraiser and at least one price opinion from a licensed real estate agent. Occassionally, the bank will request additional information from another appraiser or real estate agent in order to arrive at a price. As best as we can see, the banks tend to give the most weight to the appraiser’s valuation of the property. With that said, some of the REO homes tend to be priced very aggressively. And, on the other hand, some of the REO homes seem overpriced. This is can be the result of many things but most of the time this is the result of the differences between appraisers and their estimation of home value. Property appraisal is not an exact science and, as such, many times different appraisers will give the exact same property two completely d
