REO Comps or non-REO comps

[CANative]

If the market makes a distinction as to price paid for a sold (etc.) property that was a distress situation vs. one that was not, shouldn't the appraiser do the same?

Are you saying that assignment conditions will influence the development of the appraisal. Appraise for a bank/bank agent for purpsoses of disposition - use REO comps and exposure time? Appraise for refi or non-distress sale - use the non-REO comps and exposure times?

 

[Doug DeMars]

Part of this discussion needs a reminder that liquidation value is dependent upon market value...not the other way around. If your market can not distinguish between the two...there you go.

All market situations are different and can not, nor should be applied equally.

 

[Meandering]

REOs do not drive the market, they are a product within the market.

Availability of mortgages (credit) drives the market.

 

[Doug DeMars]

I agree the term "drive" is a bit overkill...but it's a nice way to simply state if it is a major factor or not. There are so many things that "drive" a market and credit (loose or tight) is just one factor (a big one to be certain). Supply and demand are factors too...

I really dislike the way the question is presented on the 1004MC form about REOs being a "factor". Of course it is a factor...it just may be a minor factor that doesn't "drive" the market. Even if it is only 5% of total market sales...it is still a factor! Just a small one...

REOs do not drive the market, they are a product within the market.

Availability of mortgages (credit) drives the market.

 

[Lee Lansford]

Are you saying that assignment conditions will influence the development of the appraisal. Appraise for a bank/bank agent for purpsoses of disposition - use REO comps and exposure time? Appraise for refi or non-distress sale - use the non-REO comps and exposure times?

Greg what I'm stating is that:

#1...the market provides a mix of both distress and non-distress activity;

#2...and when appraising for market value;

#3...and the market makes a distinction as to price paid (non-distress sell at a higher price than do distress sales;

#4...why wouldn't the non-distress sales be a better indicator of the Market Value for the subject than would the distress sales?