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Reo Addendum: Rationale Underlying 4 Values

Discussion in 'General Appraisal Discussion' started by ZZGAMAZZ, Oct 10, 2010.

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  1. ZZGAMAZZ

    ZZGAMAZZ Senior Member

    0
    Jul 23, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    It seems to me that the REO addendum is lacking a narrative cell for the appraiser to explain his or her rationale for the 4 values established in the addendum, including an explanation for the rationale that longer exposure results in higher value; comments pertaining to the relationship between market exposure and client-imposed market exposure (which typically isn't "reduced" at all despite the implication); the impact of an investor's return on investment as a factor in the difference between "as is" and "as repaired," etc., etc., as the specific scenario requires.

    Do peer appraisers typically address/describe their relationale, and if so, where in the REO addendum?

    Thanks.
     
  2. Tom Woolford

    Tom Woolford Elite Member

    16
    Nov 20, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    I add it to my narrative addendum, and reference it on the REOAD
     
  3. residentialguy

    residentialguy Elite Member

    66
    Mar 24, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Minnesota
    I don't know why appraisers are doing REO appraisals for less then $750. What's with doing 4 appraisals for $300-$400???? Hello....
     
  4. Metamorphic

    Metamorphic Senior Member
    Gold Supporting Member

    30
    Mar 15, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Heck, most appraiser's don't make good use of the regular reconciliation section. WTH do they need with a place to expound in the REOADD.

    As far as the 4 appraisal's thing go, I take a reductivist view. The difference between as-is and if-repaired is basically the Quality/Condition hit I made in the SC method for the difference between fair-poor and average-good. And the listed repairs are basically the difference things you'd have to fix to change the fair-poor subject to be like the average-good comps. As far as the marketing time goes, I'm almost always analyzing the value difference between REO's and shorts as part of the market conditions. I think that price differential is the perfect market indication of the price hit for a "client imposted marketing time" since that's pretty much the client we're talking about selling the thing we're talking about, in the market we're talking about, under the conditions we're talking about, in the time frame we're talking about.

    As opposed to being 4 different assignments, I see it as being the kind of 2+2=4 logical conclusion that the bank could easily read out of my report itself if it had any vaguely qualified (sentient) people on staff.
     
  5. residentialguy

    residentialguy Elite Member

    66
    Mar 24, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Minnesota
    I'm not saying it is 4x the work, as that would be $1,200. But you still need to do a market grid for each of the values asked, wouldn't you? You can't just say that the short sale sells in x days and assume all the other line items are equal.
     
  6. CANative

    CANative Elite Member

    62
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    I think assignments which require the REO scope of work should be treated as appraisal consulting assignments and subject to SRs 4 and 5.
     
  7. ZZGAMAZZ

    ZZGAMAZZ Senior Member

    0
    Jul 23, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    One "popular" client now is asking for 30, 60, AND 90 day imposed values, rather than a 30-90 day period. Now THAT IMO is downright cheesy.

    New word of the day: "reductivist" -- 1) pertaining to a change in form, 2) simplifying a complex idea to the point of obscuring it.

    I have a young friend who boasted to me last week that as an unemployed adult she now has her Medi-cal card that represents her as a legimitate member of society. Now that's reductionism at its best.
     
  8. Tom Woolford

    Tom Woolford Elite Member

    16
    Nov 20, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Not so much. Rarely do you find open market comps that require the same level of repairs as the subject.

    Your Comparables tell you what the as repaired value is(before you make a condition asjustment to them. Quick sale value (%) can be determined easily by a simple excel analysis of other forclosed properties. Everything is market driven, and while it is more work to develop the 4 values, it is not 3 or 4 times the work, presuming you work smart. I keep an ongoing excel sheet just for foreclosures from mls. Simple sorts narrow to my subjects market, and out spits the answers.
     
  9. Metamorphic

    Metamorphic Senior Member
    Gold Supporting Member

    30
    Mar 15, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    OK, I am not advocating this particular analysis for predicting DOM (or alternately predicting a price that will yield a DOM). But I've played with it. The inputs are the appropriate one's to put you on the target. The output generally passes the smell test. But I dont know the math or the theory behind it. Oh, and the guy that wrote it is a smart dude.

    http://www.donsappraisals.com/uploads/DOM_vs_Selling_Price_2.xls
     
  10. Metamorphic

    Metamorphic Senior Member
    Gold Supporting Member

    30
    Mar 15, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    California
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