To answer in short, most banks have 2 Broker Price Opinions done, giving value, and 1 appraisal. Each one can use both well maintained homes and foreclosures, and adjustments are made for the differences AND repairs needed on the subject home.
Hope this helps!
Every bank or owner is different. Some foreclosures are good deals, some aren't. Typically they need work, but not always. Often they need significant work. On average I see discount, but by the time you make the needed repairs we're back up to the same price as non-foreclosures.
Foreclosures should sell at the fair market value...for a home in that condition. If in perfect condition then at the condition of other perfect homes.
HUD foreclosures have had an appraisal and are listed at the appraised price.
BANK has an entire library of info. on any foreclosed home including pictures and etc. including conditions report.
MUCH goes into determine value of any home EACH home stands alone.
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors