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Old 02-10-2009, 04:42 PM
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bosco8373 bosco8373 is offline
 
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Default Bank owned sales

Has anyone started using bank owned sales in their appraisals? i know they are not qualified but I have a few homes I'm appraising in a new development. There are three qualified within the past six months that were contracted much earlier and I feel that value is not near that. The homes I am appraising are listed for much lower than the value i am coming up with using these three sales. I want to use the bank owned sales I have in the neighborhood because realistically that is the value in the nbd.

Let me know what you think!!

BTW - How can I change the professional status on my profile?
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Old 02-10-2009, 05:08 PM
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JSmith43 JSmith43 is offline
 
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Quote:
Originally Posted by bosco8373 View Post
Has anyone started using bank owned sales in their appraisals? i know they are not qualified but I have a few homes I'm appraising in a new development. There are three qualified within the past six months that were contracted much earlier and I feel that value is not near that. The homes I am appraising are listed for much lower than the value i am coming up with using these three sales. I want to use the bank owned sales I have in the neighborhood because realistically that is the value in the nbd.

Let me know what you think!!

BTW - How can I change the professional status on my profile?
In this era of short sale games, list price doesn't as reliably bracket the upper end of value for comparable properties due to the strategy of short sale specialists listing low enough to get a quick offer. Sometimes it takes an offer in hand to get a serious discussion going with loss mitigation-you need to get to the top of the pile, is the theory.

REO sales? I wouldn't walk past non-REO sales if you are doing a MV appraisal. Disclose the motivation (REO liquidation sale) if you put an REO in the grid. Also, be thoughtful of the comments in the reconciliation if giving the REO any weight in the analysis.

Is quick sale value the same as MV? Maybe, but only because of chance and circumstances. It is always better to use sales with a typical set of motivations & that may be (for example) quiet enjoyment of the property for an Owner-occupant. The quick sale crowd might be motivated to perform a quick flip or be interested in cash flow potential, for example.
  #3  
Old 02-10-2009, 05:40 PM
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Metamorphic Metamorphic is offline
 
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I use them all the time. I think the proper inclusion of them lends credibility to the report. However, when I use them I analyze the market to see if they're being discounted and include that as an adjustment if there's a margin between REO's and resales.
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Old 02-10-2009, 05:47 PM
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I use them all the time. I think the proper inclusion of them lends credibility to the report. However, when I use them I analyze the market to see if they're being discounted and include that as an adjustment if there's a margin between REO's and resales.
If there is consistent data, I would approve of disclosure of the REO status and the basis for the applied adjustment. But, I sure would rather use a non-REO, adjusted for, say, +/-100 SF than use an REO using an REO adjustment factor, at least locally.
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Old 02-10-2009, 05:49 PM
leelansford leelansford is offline
 
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Every neighborhood and each situation is unique. That said, in the areas in which I regularly appraise, I find a distinction in prices paid for REO and non-REO properties.

Be careful.
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  #6  
Old 02-10-2009, 06:23 PM
Em Tee Em Tee is offline
 
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I have some areas where 99% of the sales are REO sales. Of course I use them!!!

So your answer is..... it depends on your market.
  #7  
Old 02-10-2009, 07:59 PM
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Thank you for all your comments. It helps out a lot!! I just assumed you could not use bank owned sales because they are technically unqualified sales.
  #8  
Old 02-10-2009, 08:37 PM
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Metamorphic Metamorphic is offline
 
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Quote:
Originally Posted by Mentor View Post
If there is consistent data, I would approve of disclosure of the REO status and the basis for the applied adjustment. But, I sure would rather use a non-REO, adjusted for, say, +/-100 SF than use an REO using an REO adjustment factor, at least locally.
I've only been playing with these adjustments for the last couple months, so I'm still kind of fine tuning my sense of it, but it seems like in markets where REO's are more than a quarter or so of the sales they effectively run the market; the resales have to price in line with the reo's plus or minus a little condition adjustment for deferred maintenance. In markets below that level it seems like the banks are discounting 5-15% below MV to move their properties a little faster.
  #9  
Old 02-10-2009, 08:38 PM
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Originally Posted by bosco8373 View Post
Thank you for all your comments. It helps out a lot!! I just assumed you could not use bank owned sales because they are technically unqualified sales.

You have to be a little careful. Make sure you're using the sales from a bank to a private party. The transfer from the foreclosure company to the bank or holding company are NOT sales you can use.
  #10  
Old 02-10-2009, 08:42 PM
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bosco8373 bosco8373 is offline
 
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Yes most of the sales in this new development are sold to private parties from banks. This area I am appraising is swamped with bank owned sales. There is only 1 or 2 person to person sales within two miles!! It should be a great time to buy in the next 4-5 months!!

Thanks for the help.
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