Hi Cablekc,
Banks have an Asset Manager either in house or they " job " it out who orders a BPO ( which is like an appraisal) it is very detail oriented to come up with a price and thats the price the bank wants. Even if $750K is owed on the loan and the BPO says comparable homes right now are going for $450k then thats what the bank wants. Buyers set the market always have and always will, it is what someone is willing to pay for a property, thats what makes the worth of a home. Earlier in the market when prices were declining these reo's would get new BPO's either monthly or when the bank really wanted the property off it's books. Now almost all reo's have multiple offers on them so the banks are really happy with the way things are so don't be surprised by an increase in listing prices at the low end.
Hope this helps. If you have any further questions feel free to contact me.

Regards,
Allyson
408-705-6578
DRE# 01397256
allyson@homes byallyson.com