Selling Reno And Sparks Real Estate Blog


Are Banks Throwing Darts to Price Their Homes?

I did a presentation in front of my BNI group on banks and how they price these Las Vegas REO homes for sale.  I started out the presentation with a question for the group.  I wanted to know how the general public perceives bank pricing.  One response was “throw darts!”

It definitely could appear that darts are thrown in order to achieve a price but it isn’t that simple.

When a home goes in default (one or several payments are missed) is actually when the pricing process begins.  The banks (or servicers) begin to order pricing reports in themoney form of appraisals,BPOs (Broker Price Opinions) or AVMs (Automated Valuation Models).

The timeline of foreclosure in Nevada could be as expedient as 4-5 months and can drag on for several years (for whatever external reasons such as bankruptcy.)  During this timeline, the servicers, lienholders (or investors) are ordering these reports.

They look at several things when pricing a home:

  • Condition of Property
  • Comparable Homes Listed & Sold
  • Declining, Stable or Appreciating Market
  • Average Days on Market

Most of these reports will support one another over the foreclosure time frame.  How an asset manager for the servicer or bank will react to the reports is subjective.  Many reports will ask for pricing depending on marketing time & condition.  In fact, many reports want 4-6 different prices such as:

  • 30 day distressed as is
  • 30 day distressed repaired
  • 90 day as is
  • 90 day repaired
  • 180 day as is
  • 180 day repaired

Declining markets also cause a host of confusion.  If it is determined that a market is declining at 10% every 6 months and the asset manager wants it gone in 3, they may list it 5% lower than the 30 day distressed price.  This is in anticipation of further deteriorating markets and to get the asset off the books in the time frame they would like to.

If the home is determined to be ineligible for financing, they may pick an “all cash price” (as is value).

And so on and so forth……..

The important thing to understand when purchasing a Las Vegas REO home (or any other home for that matter!) is to remember list pricing is NOT a firm price.  Low list prices may be set to attract multiple buyers and cash offers and a home may go WELL over that list price.  High list prices may mean the bank has time to sit on their asset (haha).  It is important to work with a Las Vegas real estate agent who is familiar with the market and can pull comparables when it is time to write an offer.

As you can see the decision isn’t made by one person – the REO listing agent.  Or by the asset manager’s dart board.  It is a complicated process which causes confusion to buyers and even other real estate agents.  I guess I can call it “the is what it is” factor.

Thanks,  Renée Burrows 702-580-1783 Broker/Owner, REALTOR®


copyright 2006-2013 Renee Burrows, REALTOR®, Savvy Home Realty Solutions  702-966-2494

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Comment balloon 48 commentsRenée Donohue~Home Photography • September 15 2011 09:35AM


This week, I've been thinking that Freddie Mac throws darts--or just wants to keep their homes forever and ever because like good wine, homes are better the older and more abandoned they are (LOL)

Posted by Melissa Zavala, Broker, Escondido Real Estate, San Diego County (Broadpoint Properties) about 7 years ago

Most of the banks that I have been working with are pricing there properties very competitively to sell quickly and get them off there books.

Posted by James Loftis, ( about 7 years ago

I think that most asset managers miss the point deriving their price from convoluted in-house formulas and out of area associates providing BPO's as gospel.  You're more likely to get an accurate price with the dart method depending what their target looks like Renee.

layered and slightly out of focus typical bullseye type targets   

Posted by Kevin J. May, Serving the Treasure & Paradise Coasts of Florida (Florida Supreme Realty) about 7 years ago

It definately has been a learning curve for the  mortgage companies that are holding the assets as far as pricing is concerned. I think  the Listing agent of the asset can be the best resource for the asset manager in creating a price plan. They are the ones providing the monthly reports prior to the asset becoming an "ACTIVE"  property on the resale market.

Posted by Laura Gray (RE/MAX Realty Group) about 7 years ago

Renee - Melissa cracks me up.... This is a great explanation of REO pricing.  Several of my clients have been involved in the REO bidding war and at first a lot of them didn't believe mewhen I said this house will sell for more than asking.

Posted by Michelle Gibson, REALTOR (Hansen Real Estate Group Inc. ) about 7 years ago

Heck it seems like you can put "Foreclosure" on a listing and people assume it is a great buy and they sell quick in our area. 

Posted by Bob Jakowinicz, Michigan Real Estate Agent-- MI RE Adventures (National Realty Centers Livonia--Bob Jakowinicz) about 7 years ago


If I were to summarize my observations of recent years, it appears banks make better "legal interest" title holders than homeowners.



Posted by Steve, Joel & Steve A. Chain (Chain Real Estate Investments & Mortgage, Steve & Joel Chain) about 7 years ago

Renee, this is really helpful information and is part of the reason one may be scratching one's head with what banks may be thinking.


Posted by Cal Yoder, Homes For Sale in Lancaster PA - 717.413.0744 (Keller Williams Elite) about 7 years ago

We have that here in our market, but not as bad as in Las Vegas.  Pricing is always a question that buyers want answered "How'd they come up with that price."  When you were done with your presentation, did they "get it" ??

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) about 7 years ago


Love how you broke it down from the banks perspective and your experience with it.  

It does sometimes seem like they do throw darts to price.  I have sold foreclosures three years ago that STILL are great deals today - ya gotta love those low darts!

All the best, Michelle

Posted by Michelle Francis, Realtor, Buckhead Atlanta Homes for Sale & Lease (Tim Francis Realty LLC) about 7 years ago

Renee, there are several banks in my area that  price it low to encourage over bidding. .and that seems to frustrate and confuse buyers.

Great topic and I know you are the authority on this. .

Posted by Fernando Herboso - Broker for Maxus Realty Group, 301-246-0001 Serving Maryland, DC and Northern VA (Maxus Realty Group - Broker 301-246-0001) about 7 years ago

Renee, I was fortunate to take on a new bank this past month, and they have given me great freedom in seting a price on their REOs.  I nearly fell over. 

Posted by Mike Cooper, Your Winchester, VA Real Estate Sales Pro (Cornerstone Business Group Inc) about 7 years ago

Good Morning Renee, I work for a numbe of differnt banks listing their properties here in NH. There is 3 distinct thoughts, the one where the value is assessed less repairs needed to sell as is and sell within 30 days, this is the most popular as when it is sold it is sold, there are n inspections or mortgages that can fail and the proeprty come back on the market. The 2nd is pricing it at retail and then lowering teh price each month until it sells. I have only 1 bank that does this and i was told it is to slow losses. For me it increases losses as they have to pay to maintain it, heat it and risk further loss from theft or vandalism and then there is teh fannie or freddie way where they pay a heck of a lot to repair a house to move in condition which if lucky, they get back the same amount as repairs but often lose money instead of just selling it as is to begin with.

Posted by Scott Godzyk, One of Manchester NH's Leading Agents (Godzyk Real Estate Services) about 7 years ago

Renee-I think the experience level of the asset managers for several servicers is helping them establish more reasonable initial sales prices. But there are so many players in the market now, the ones that are outside the norm really stand out.

Posted by Wayne Johnson, San Antonio REALTOR, San Antonio Homes For Sale (Coldwell Banker D'Ann Harper REALTORS®) about 7 years ago

I really like the fact that you point out the possibility of an REO going over the list price, instead of being sold wholesale.  Around Silicon Valley, it seems that most of the properties in my immediate area get flagged by bargain hunters and sell well below market value.

Posted by Bryan Robertson, Broker, Author, Speaker (Intero Real Estate) about 7 years ago

I have to agree witht the dart throwing.


One of my short sale properties just got an appraisal 40% over list price. 

Posted by Keith Lawrence, ABR, CDPE, SFR, 203K Specialist (RE/MAX Properties) about 7 years ago
I' m seeing some REO properties priced pretty appropriately - and others where you can only conclude that throwing darts would have been more likely to get them where they are trying to go. Even some buyers are starting to ask which bank owns it and then decide if making an offer or waiting for reality to kick in will be the better strategy.
Posted by Nancy Conner, Olympia/Thurston County WA about 7 years ago

Of course they don't throw darts. That would be silly. 

Everyone knows they draw straws. 

Posted by J. Philip Faranda, Broker-Owner (J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY) about 7 years ago

@J. Philip - LMAO

Renee - You've given a great detailed explanation of the analysis the banks go through in making a decision, but are you sure about the darts regarding Short Sales?? LOL

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) about 7 years ago


OK, but I still think they throw darts to set the price.  But I am going to use your analysis, so I sound smarter than the average banker.

Posted by Evelyn Kennedy, Alameda, Real Estate, Alameda, CA (Alain Pinel Realtors) about 7 years ago

I think that they are most certainly throwing darts with some of the pricing I see!

Posted by Chandler Real Estate Liz Harris, MBA, #ChandlerRealEstateAgent (Liz Harris Realty) about 7 years ago

Renee, you certainly have the knowledge to share on this subject and i wish they pulled straws at least it would be fairer then throwing darts!!  FreddyMac i just shake my head here on them...

Posted by Ginny Gorman, Homes for Sale in North Kingstown RI and beyond (RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate) about 7 years ago

I am in Florida where 78% of sales are REO or short sales.

REO's sell quick not necessarily because of price but because you can actually buy them and not wait 6 months for a response on a short sale.


REO are priced at market value.

Short sale are priced at whatever the lising agent thinks will stimulate offers.  The bank looks at the BPO and wants a bunch more.


Eve in Orlando

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) about 7 years ago
Is paying somebody $45 to do a drive by BPO who never ever goes inside the house a smart way to set the price on a home?
Posted by Alan Grizzle, Full Time Realtor, Lifelong Resident of Dahlonega (Chestatee Real Estate) about 7 years ago

Renee: Very goog information. I am seeing the REO's that are priced right and in good condition gone in the first couple of days. In many cases over list price.

Posted by Surprise Arizona Realtor Jim Braun Sun City Grand Active Adult Communities, Surprise AZ real estate Phoenix West Valley (Coldwell Banker Residential Brokerage Jim Braun Sun City Grand Az ) about 7 years ago

Renee, I don't deal with REOs, but I do a lot of shorts sales.  My pet peeve is with the other Realtor who does the BPO for the bank and comes in too high.

In my market of Ocala Florida, the agents most likely doing the BPOs are the newbies or those starving because they don't know or have business.  Therefore they are usually the least qualified.  But they will run all over the county and do a BPO for $30 and blow a $100-300k deal.

Posted by Bob Miller, The Ocala Dream Team (Keller Williams Cornerstone Realty) about 7 years ago

I thought they just pulled a number out of a hat.  I never even considered a dart board. 

Posted by Karen Steed, Associate Broker Haralson Realty (Tallapoosa, Bremen, Waco, Buchanan, Temple, Carrollton) about 7 years ago

They don't really see the property. They like to go by square footage. They would rather loose over 50% by foreclosing than about 25% by Short Sale.

Yeah! Sounds about right.

Posted by Brian Schulte, SFR, Sierra Vista, AZ (Allison James Estates & Homes) about 7 years ago

Renee, you're so right, the banks are, for the most part, doing a LOT of behind the scenes work that most of us ever see - BPO's, appraisals, inspections, etc.  And, like your Las Vegas market, here in our Phoenix area market, those homes which are priced correctly ARE moving quickly - many receiving first day multiple offers, actually driving prices upward!!!  The investors are working with savvy real estate agents who can do a CMA quickly and can assess if the price the bank has set is one that will give a good return.  While we don't know the asset managers' exact thinking, most have directives on the amount of losses allowed and how quickly to move that asset.

Great job.

Posted by Juli Vosmik, Scottsdale/Cave Creek, AZ real estate 480-710-0739 (Dominion Fine Properties) about 7 years ago

This still doesnt explain to me why they refuse multiple short sale offers and then foreclose and list the property for tens of thousands less several months later, and sell it for even less than that. Happened on one of my own listings earlier this year, but I see it ALL THE TIME around the Denver area. What gives?

Posted by Jayson Holland, Jay Holland ( about 7 years ago

I have bought over 100 homes from banks as an investor and as a Realtor, and I can tell you the banks have no clue.

Why would you price a waterfront home at $26090 on the courthouse steps that is tax assessed at $75k.   A water front home in virtual move in condition.  Our theory was that who ever priced the home had a 26 year old child and a 90 year old grand parent. 

Another deal I witnessed was a short sale.  Solid 3/2/2 move in ready, newer roof, good flooring all appliances.   Asking $84,900.   Sold for $50k.   WHY.   And why did the bank not try to sell it by lowering the price on MLS.  They could have marketed it at $79k, $69k or $59k.  To take $50k is not what a reasonable seller would do when the asking price and tax assessed values are over $75k.  With out even countering.   I did notice the listing agent was the selling agent.  Gotta wonder whose best interests were looked after on this one.

Posted by Randal Jenkins (Coldwell Banker F I Gray and Sons Residential, Inc.) about 7 years ago

Great explanation but are you sure it's not darts? I'm convinced sometimes.

Posted by Lyn Sims, Schaumburg IL Real Estate (RE/MAX Suburban) about 7 years ago
Good information.
Posted by Jim McCormack, Nashville Short Sale REALTOR - Stop Foreclosure (Nashville Short Sale Specialist - Jim McCormack - Edge Advantage Realty, LLC - 615-784-EDGE (3343)) about 7 years ago

I've seen more and more where banks price their REOs a little on the low side in order to create bidding wars and thus drive the price higher.

Posted by Rob Arnold, Metro Orlando Full Service - Investor Friendly & F (Sand Dollar Realty Group, Inc.) about 7 years ago

Not so much darts as I think they are throwing lasagna at the proverbial wall, at least in short sales.

Posted by Sylvia Jonathan, Broker Associate, SFR (Coldwell Banker Platinum Properties) about 7 years ago

Renee, this is useful information and I appreciate your post.  And, clearly there is much human categorization going on so NO WONDER there are so many contradictory results and so much confusion.  ARGHHHHHHHHHH!!

Posted by Beverly Femia, Broker Realtor Stager - Greater Wilmington, NC Are (BlueCoast Realty Corporation) about 7 years ago

Throw darts, maybe; draw straws, perhaps!  What I imagine is a bunch of buffoons...err, intelligent, professionals playing a game of pin the tail on the donkey with the expected results.  Tails all over the place...  a little "crude" aware!

Posted by Steven Pahl, Real Estate Consultant Tampa, FL 813-319-6423 (Keller Williams Tampa Properties) about 7 years ago

Good post as usual, Renee. So much depends on the asset manager(s). My last go-round with Ocwen started with the asset manager insisting the value of the property was at least 10% higher than what my BPO came in at (just under $200,000). I got the listing at the admittedly high-ball price, and in short order, had it reassigned to one of their own agents.

By the way, it's still on the market, now reduced to $166,250.

If the BPO and REO departments are under the same roof, they probably have different agendas. That doesn't help us on the ground, though.

Posted by Mark Ruda (Mark A Ruda) about 7 years ago

I know a listing priced exactly at the Zestimate.  A dart throw would have been more accurate.  Thanks for a great post.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) about 7 years ago

Great explanation.  I'm sure you know some of those "accusations" about pricing with darts come from agent who don't handle REO property. 

Posted by Tammy Lankford,, Broker GA Lake Sinclair/Eatonton/Milledgeville (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) about 7 years ago


Great post.  Oh yes, you are right on.  here's an additional take, instead of 'it is what it is' .....So many times, it is like the scene from the Wizard of Oz where the main characters are standing out in front and there's some little man back there pulling the strings on 'making smoke and grand gestures' from which a number comes this case the bank's REO list price. 

Just 2 wks ago, I called an REO agent who we do a lot of work with to chat about a property that had just been foreclosed on.  He was assigned the property from the bank but it wasn't listed yet.  Turns out that the lender ordered 2 BPOs and one REO appraisal.  Our peer had performed a BPO at the client's request, we performed the REO appraisal....we were within 5% of each other (in the neighborhood of $600k).  Then another Realtor performed the 2nd BPO, and said the value was $825....WHAT?!

guess which list price the bank went with? you got it!  $825k...and now our peer is stuck w/ a listing that he can't sell for a bank who is unrealistic and out of touch...and doesn't understand why there is no activity on an otherwise nicely appointed house in Chicago. 

Great post Renee. Keep up the great work!


PahRoo Appraisal & Consultancy

Posted by Michael Hobbs, SRA, LEED GA, RAA (PahRoo Appraisal & Consultancy) about 7 years ago

I am working with a bank that I think actually IS throwing darts. I asked them to price a condo at $75,000. They priced it at $82,000 then $77,000 then $75,000 then $67,000 then $79,000. Agents want to know why the price went from $67,000 back up to $79,000 and I have no explanation. Darts.

Posted by Cynthia Larsen, Independent Broker Serving Sonoma County, CA (Safe Haven Realty) about 7 years ago

Darts would be more accurate than bank methodology!!!  Some bizarre results lately. They need to remember that you have to compare apples to apples...distressed sales to distressed sales...

Posted by Paddy Deighan JD PhD, Paddy Deighan J.D. Ph.D ( about 7 years ago

They don't throw darts,  that takes skill

Posted by Michael Singh,Broker (Singh Real Estate) about 7 years ago

And then there is Fannie Mae that freely admits to "PREMIUM PRICING".  What a waste of time and resources, to sit on an overpriced asset waiting for the Asset Manager to reduce the price when we are still in a declining market.  You have to ask... What were they thinking.!!

Posted by Debora Nichols, Realtor Anthem,Phoenix,Scottsdale,Glendale,Peoria (Residential Sales, Purchases, Investors, Vacation Homes) about 7 years ago

There will always be a variety of pricing approaches and pricing models. If it was as easy as 2 + 2 = list price we would not be happy campers as real estate professionals. Part of the value that we bring to the transaction is our ability to have this kind of conversation about pricing, among other things.

Posted by John Juarez, ePRO, SRES, GRI, PMN (The Medford Real Estate Team) about 7 years ago

I think it maybe a case of handing over their REOs to the highest price quote and the lowest bidder on commission. (You know agents willing to buy the listings)

Posted by Respect Realty LLC, Brokers - Oregon / SW Washington Real Estate (Respect Realty LLC) about 7 years ago

While it does appear that the banks are throwing darts oftentimes to determine value, I always find it interesting how extremely difficult it is to sell a house for less (or more) than it's worth.  When houses are priced too high, they sit there until the price is dropped to a reasonable amount.  When they are priced too low, they get 10-12 offers in the first week, and the price is bid up to close to current market value.  Sooooo, regardless of where they start, houses tend to sell for pretty much what they are worth...if exposed to the full market via the MLS and internet.

Posted by Matt Robinson, (Professional Investors Guild) over 6 years ago

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