Which valuation method is most commonly used for bank-owned properties?

The Broker Price Opinion (BPO) is often the most commonly used valuation method for bank-owned properties, also known as real estate owned (REO) properties. Banks and lenders typically utilize BPOs to assess the value of properties they have acquired through foreclosure proceedings.

BPOs are usually less formal and costly than traditional appraisals, making them a practical choice for banks looking to quickly evaluate property values without incurring significant expenses. A qualified real estate professional, often familiar with the local market conditions, conducts the BPO. This entails analyzing recent sales data, current listings, and market trends to estimate a property's value based on observed indicators.

Other valuation methods, such as Comparative Market Analysis, Cost Approach, and Sales Comparison Method, may also be used but are often more comprehensive or time-intensive than a BPO. The BPO's efficiency and cost-effectiveness make it particularly appealing for financial institutions managing multiple REO properties.