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Short Sale Appraisal

Discussion in 'Urgent - Help Needed' started by Tony in Ohio, Apr 25, 2006.

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  1. Tony in Ohio

    Tony in Ohio Member

    0
    Jan 15, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Ohio
    Not real urgent, but I do want help.

    I accepted an order for a URAR and just found out it is for a short sale.

    Have any of you done an appraisal for short sale before? I want to make sure I have all my bases covered.

    I plan to tweak my intended use comment and disclose what I know. I don't know the sale price yet nor do I have a contract. Heck it does not even have an estimated value. I am going to appraise it to traditional market definition since I did not recieve directions otherwise.

    Any help is appreciated.
     
  2. Denis DeSaix

    Denis DeSaix Elite Member

    232
    May 16, 2005
    Professional Status:
    Certified General Appraiser
    State:
    California
    Tony-

    Who is your client?

    If it is for the existing lender (or lien-holders), then it would make sense that they want a current market value to evaluate the sale offer.
    If it is for the buyer, then it is a standard purchase appraisal. The fact that the sellers are "upside down" wouldn't have an affect on market value.
     
  3. Tony in Ohio

    Tony in Ohio Member

    0
    Jan 15, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Ohio
    Denis

    The Client is an AMC/service company I have never worked with before. and with REO in their name. that is why I asked if they needed an REO appraisal. Their response was no, just a 1004. No other instructions or supplemental comments given on the order or by phone. It is also not a COD.

    I am leaning towards the lender wanting to evaluate the sale offer and plan to ask the owner a few questions, and then the lender, but I wanted to run it by you guy's and see if there was something I was missing or should look out for or inquire specifically about.
     
  4. Bobby Bucks

    Bobby Bucks Elite Member

    179
    Jan 27, 2002
    Professional Status:
    Real Estate Agent or Broker
    State:
    North Dakota
    I receive 3-4 short sale requests a year. My client has always been the lender and I am not furnished a sales contract, nor is it necessary or relevant. Sometimes they will include the mortgage payoff amount in the request, sometimes not. Sometimes the homeowner or the buyer will mention a sales price, but I ignore it. The properties are usually in below average condition, but not a complete wreck. Occasionally I get value pressure from the buyer wanting the value DOWN because it is a short sale, i.e. the lender is losing money. I include the REO addendum for one client because they require it; however, it really isn’t necessary IMO.. The lender knows they’re losing money on a short sale; they merely want to make sure they’re not losing any more then they should. Be careful of the Sheetzers on these. I’ve done about 5 of these where the same seminar guy was buying them. The assignments are very similar to FHA loss mitigation.
     
  5. Denis DeSaix

    Denis DeSaix Elite Member

    232
    May 16, 2005
    Professional Status:
    Certified General Appraiser
    State:
    California
    Tony-

    I'd go with Bucks' advice.
    (He's got a better crystal ball than I do!)
     
  6. Bobby Bucks

    Bobby Bucks Elite Member

    179
    Jan 27, 2002
    Professional Status:
    Real Estate Agent or Broker
    State:
    North Dakota
    Denis my comments are based on my experience and limited knowledge. There may be a considerable distance between my way and the proper way. :)

    I’m hoping Oregon Doug will post on this, if my memory is correct he is very experienced with short sale assignments.
     
  7. Walter Kirk

    Walter Kirk Senior Member

    15
    Jun 24, 2003
    Professional Status:
    Licensed Appraiser
    State:
    New Jersey
    Short sales reflect the fact that the market value of the property is less than the mortgage balance. The market value is all that we should be concerned with.

    Of course the reports will be closely read (as opposed to many mortgage lending reports) and you may want to provide a little more detail in your comments. When the bubble breaks we can expect lots of these assignments.
     
  8. Mountain Man

    Mountain Man Elite Member

    29
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Georgia
    Bucks,
    I've never heard of a "short sale" appraisal before. Is this one of those Sheet's head flippers financing a purchase for repair and re-sell?
    Do they usually request a repair estimate like in typical REO assignments? Or are you just simply doing an "As Is" with market adjustments for the "ugly factor"?
     
  9. Bobby Bucks

    Bobby Bucks Elite Member

    179
    Jan 27, 2002
    Professional Status:
    Real Estate Agent or Broker
    State:
    North Dakota
    Mell from what I recall most assignments I’ve done have been “as is”. Based on the short sales I’ve seen, in most instances the lender loses less than going the foreclosure route. They save the RE commission, not to mention the element of the unknown when the house is vacant for an extended period, repairs, vandalism, field service fees, etc.
     
  10. Jan Roseberry

    Jan Roseberry Senior Member

    3
    Sep 25, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Ohio
    I just did a short sale with a Realtor (perfect target for Bobby--she calls me honey--trust me, I am not the 'honey' type; has a Caddy; belongs to the 'Club' and her husband is a plant manager) as a buyer.

    My clients have never requested an REO addendum and just want fair market--usually 30 to 60 days instead of the standard 90 to 120 days. The biggest problem I always have is that there are no utilities--it is difficult to predict what will and won't work; house is winterized -- but who knows if it was done correctly or when it was done.
     
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