I admit it. When Susan Allen, vice president of strategic relations at FirstAmerican CoreLogic, asked a room full of about 85 mortgage professionals (and a couple of journalists) to divide into small teams to simulate a property valuation, I considered bolting for the door.

The idea of participating in a group activity with strangers before 9 a.m. (and before a second cup of coffee) was, to say the least, unappealing. Apparently, I wasn't the only one with that thought; a handful of attendees at the recent seminar in New York snuck out quietly before the exercise began.

Allen, an expert in risk management who held senior positions at U.S. Bank, GMAC and JPMorgan Chase before joining First American in 2009, said the point of the mock exercise was to show the challenges risk managers face in valuing repossessed properties.

"Properties are illiquid, unique assets," she said. "Therefore, property values exist in a range, not as a spot value."

For those who stayed for the exercise, that point was well illustrated.

Each team was given a packet of materials on the same property in New Jersey that included an interior appraisal, an automated valuation model, a broker price opinion and public information from the Internet about the location and other properties in the area.

Using those materials, we were to devise a bid for the property. The "bank" in the scenario, we were told, had established a market value, which was unknown to the group. The bank's policy was to accept any offer that was at least 85% of that market value. Our mission was to buy the house at the lowest possible price.

I may be a business journalist, but I'm not a homeowner, so most of the materials were foreign to me. I was grouped with another fellow journalist and a woman who worked as an analyst at a hedge fund. Though none of us did valuations for a living, it became rather clear that the appraised value of about $324,000 was way too high.

The house was in need of some serious repairs; it had water damage and a sloping foundation. And some properties in the vicinity had sold for less, but were more aesthetically pleasing and in better condition.

As we scrambled to put our bid together, Allen walked through the room and shouted, "Your manager is putting pressure on you, and you have eight more of these to do by lunch!"

We settled on a bid of $225,000. The winning bid? $239,000.

One group got it on the nose. Another came within a hair, bidding $238,000. The rest of the bids ranged from as low as $170,000 to as high as $290,000.

In a room full of mortgage professionals, the wide range of bids was surprising. And it's evident of the subjective nature of the process, which makes it challenging for lenders to ensure they get the best possible return on their collateral.

"Valuers must manage many ambiguous factors when arriving at a value, including selecting comparable properties, assessing home price movement, and estimating the 'cost to cure' of items ranging from outdated lighting to cracked foundations," Allen said.

The process has become even more arduous since the housing market bust, which has destroyed prices unevenly across geographies and left more properties in disrepair.

Considering I don't plan on purchasing a home in New Jersey anytime soon, I'm OK with the fact that my bid would have been rejected by the bank. But I wonder about all the risk managers out there who do this every day.