Banks unloading real-estate-owned properties face some tough choices, such as whether to auction off homes or sell them to investors, and whether to fix them up first. But whatever they decide, the real challenge is to avoid dragging down property values from their already-depressed 25% to 30% discounts.

Finding the best price is "an art, not a science," said Matt Sylvia, a Bank of America senior vice president and REO production executive, speaking on a panel at a Mortgage Bankers Association servicing conference in Orlando, Florida Wednesday.

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