BPO and Appraisal

[Socrates]

AMs and lenders for REOs are now looking for 30 day quick sale values. I would verify the marketing time that the lender client is looking for

 

[residentialguy]

AMs and lenders for REOs are now looking for 30 day quick sale values. I would verify the marketing time that the lender client is looking for

as well as finding out if they want the most probable price it would have as a lender owned property.

 

[J Grant]

AMs and lenders for REOs are now looking for 30 day quick sale values. I would verify the marketing time that the lender client is looking for

The quick sale marketing value is onthe REO addendum in addition to the first value presumed in typ mktg time on the 1004 form

 

[residentialguy]

If that's what they ordered.

 

[J Grant]

IMO I don't believe that the 1004 URAR should be used for an REO appraisal per the intended use stated in the form itself.

I don't have a problem with the 1004 form, esp if it has the REO addendum for an REO property. But I do think that the powers that be might need to
re write the definition of market value , particularly addressing the threshold of what consitutes "unde stimulus".

That said, I think that Fannie and FHA and Freddie have answered the question, at least in part, in their updates saying that REO sales can be used as comps, (but not distress sales, aka auction sales and sheriff sales).

Though they state appraisers need to consider adjusting for any differences among comps physical features and sale types, this is true for all comps. The fact that they came out and said, yes, REO sales can be used as comps, indicates that they accept the "undue stimulus " of lender owned sales as within an acceptable threshold for market value purpose reports.

 

[DMZwerg]

A MV SOW does not mean REO comps can't be used ...

Correct

... and it also does not mean we "have to adjust" for a difference between an REO and non REO sale

Potentially incorrect (and almost certainly in context).

You are referring to a 1004. Since you are referring to a 1004 FNMA standards also apply to some degree.

If I choose to use REO's as comps I am still providing an opinion of market value if that is what the purpose of the appraisal states and that is what I sign that I have provided. The comps you use does not change the purpose of the appraisal .

Yes it could.
If I choose all commercial comps the effective "purpose" (SOW) could change from residential to commercial, so why wouldn't using all REOs (unadjusted) also potentially change the purpose?
The purpose (based on SOW) is to provide an opinion of MV, and on the 1004 that would be under the FIRREA definition, and the SOW goes on to mention "comparable sales". If properties are not comparable then how one uses and addresses them could potentially change the effective "purpose" of the appraisal. Certification #4 on the 1004 states:
"I developed my opinion of the market value ... on the sales comparison approach to value. I have adequate comparable market data to develop a reliable ..."
So, if you are using only REOs in the report then you are certifying that they are comparable to the subject property as it exists under the FIRREA Definition of Market Value provided and that they are adequately comparable to develop a reliable opinion of MV under said definition. Note I am not saying REOs can NEVER be included at all for any purpose, but rather that, as they ARE under undue stimulus (etc.) they could be considered not comparable to the subject property and if you are using them without addressing the comparability issue you may be violating certification #4 and #9 (and #15). Not including otherwise comparable REO sales could potentially yield a violation of #7 as stimulus is not mentioned in #7 AFAICT.

So, Grant, how is THAT for coming in on BOTH sides of the issue?

 

[Sharon Dossett]

Thanks for everyones comments.

The order was for just the 1004 along with the 1004MC. The SOW was for a REO without the REO addendum, which means they wanted Market Value.

I got a little more information when I refused to meet in the middle. They requested I include a comment on the value based on a 30 day sale along with my market value. The reason I was given for this request was that they were having properties staying on the market longer than 90 days and because the BPO's were lower than the appraisals were, and now they want a comment included on future orders indicating a value for a 30 day sale along with market value. Why not just order it with the REO addendum???

I included in the additional comments that the client requested a value based on a 30 day sale along with my estimated 30 day sale value and that worked for them.

What I have been seeing is that the BPO's are priced lower in the lower priced areas for faster sales to investors. Of course we all hear that in the higher priced areas the real estate agents complain that our appraisals are too low and killing the deals.

Why would the client choose the BPO over the appraisal? I did send all MLS info to the client with the interior pics of the agents comps showing a big difference in their comparables and mine. I was told that the bad agents with lower BPO's for faster sales would be weeded out.

 

[Sharon Dossett]

Thanks for everyones comments.

The order was for just the 1004 along with the 1004MC. The SOW was for a REO without the REO addendum, which means they wanted Market Value.

I got a little more information when I refused to meet in the middle. They requested I include a comment on the value based on a 30 day sale along with my market value. The reason I was given for this request was that they were having properties staying on the market longer than 90 days and because the BPO's were lower than the appraisals. Now they want a comment included on future orders indicating a value for a 30 day sale along with market value. Why not just order it with the REO addendum???

I included in the additional comments that the client requested a value based on a 30 day sale along with my estimated 30 day sale value and that worked for them.

What I have been seeing is that the BPO's are priced lower in the lower priced areas for faster sales to investors. Of course we all hear that in the higher priced areas the real estate agents complain that our appraisals are too low and killing the deals.

Why would the client choose the BPO over the appraisal? I did send all MLS info to the client with the interior pics of the agents comps showing a big difference in their comparables and mine. I was told that the bad agents with lower BPO's for faster sales would be weeded out.

 

[residentialguy]

Thanks for everyones comments.

The order was for just the 1004 along with the 1004MC. The SOW was for a REO without the REO addendum, which means they wanted Market Value.

It is supposed to mean that, but it doesn't necessarily mean they know that. Did you ask?

They requested I include a comment on the value based on a 30 day sale along with my market value.

That's called a new assignment

 

[NORTON]

Has anyone had a problem when client orders a BPO and an appraisal and wants the appraiser to reconsider value?

I appraised an REO and the client had already received a BPO with a value 30k less than my appraisal and they are requesting that we meet in the middle on the value. WT@!!!
The real estate company sends back message to client that any listing amount over 35k it will sit on market for 90+ days. Their comps are not comparable.

In my opinion the real estate company wants a fast sell, or knows someone who wants to buy it, put a little work into it and make a profit of 30 to 40k. Has anyone seen any evidence in the market of this situation?

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Review all types of residential real estate valuations to ensure the delivery of a quality product that meets all industry and customer specific requirements. Primary function is to perform reconciliation of market value the product
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Review and provide value reconciliations between current Broker Priced Opinion and/or Appraisal value and a prior BPO and/or Appraisal value

Using available resources provided, determine a reconciled market value and provide Appraisal License Number and E-signature within the RMV product

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