Disposition Value Form

[residentialguy]

Verify..can't stress it enough. You will need to discuss the forms with them and they need to order, in writing, the most applicable form, (which you need to agree with). If they're going thru an AMC or delivering thru Appraisalport, they may not be set up for that form, a problem I've run into. They need to be prepared to actually review it the old fashioned way...they'll actually need to read it (pdf)

 

[Meandering]

I don't like the direction you're going with this Marion. That's like saying if a 2 story is selling for the same price as a 1 story and selling for the same price in Ca as they are in MN, they're all good to use as comps for each other. The conditions of the sale are just as important as the improvements and location in being comparable, regardless of price equivalence. Yes, sometimes you have to cross over, if you need to. But if you don't need to, then don't. Stick with apples to apples.

I said comparables, I did not say Other sales based on condition of sale.

Gheeze.

Our REO market still predominates some neighborhoods here. There is little to no price variance between comparable owner occupied and REOs in some neighborhoods. Therefore, it is important to show that is part of the market, via comparables that are both OO and REO.

Some neighborhoods have seen slight appreciation and there is a price difference with REOs commanding price discounts to similar OOs.

But that defeasance, that's what'll get you every time if you don't look for it in the deeds.

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[residentialguy]

I said comparables, I did not say Other sales based on condition of sale.

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A REO and a traditional arms-length sale are not good comparables to each other. Their price equivalence has nothing to do with it. Don't get me wrong...I'm not saying they can't be used. Sometimes not so good of comparables are the best available. As far as showing them in the market, I do at least 6 different trend analyses with them, both with micro market of comparable improvements and macro of SFR in the neighborhood...so the client is well aware of their presence and how they affect each other. Using 1 or 2 tokens in the SCA is pretty much worthless in that regard.

 

[Meandering]

"A REO and a traditional arms-length sale are not good comparables to each other."

Why not? We have a mega-bank with lots of them, and advertises them in the MLS that they demand to credit check every potential buyer prior to accepting an agreement of sale. Not much "compulsion" to sell there. Everything else can be adjusted for. Trend analysis, paired sales, sensitivity, multiple regression, whatever trips your appraisal trigger, the adjustments are extractable from the market data. You might want to believe that the REOs are "tokens", as well they may be where you are. But I've 500 home neighborhoods where REOs are half or more of all sales, year over year since about 2007. Here, they are comps.

 

[residentialguy]

Not much "compulsion" to sell there? Really.. Did you call and verify that? Who did you call? How many homes do they have on their books? You say they have "lots of them"...what if you had lots of homes you didn't want that sit vacant sucking you dry? What was the situation with each REO comp? Did the HOs string them along for years? Are they renting these houses or are they just sucking money from them every day they sit vacant? Can they profit from the sale? (meaning keep the money that the home sells for over the total mtg amount). Do they have an as-is REO addendum that stipulates to the seller's status as owner through foreclosure and disclaims liability for repairs, overt or latent defects, building code or zoning enforcement, and prospective title claims? Full disclosure?

No...you and I both know the answers to these questions. So, with most of that in play, I stand by my opinion that they are not comparable conditions of sale and are next to impossible to verify the exact conditions of the sale. Per one of PA's realty shops: "Banks are motivated sellers. To avoid on-going carrying costs, maintenance and lost interest income, banks may negotiate quick sales at very attractive prices with flexible terms and conditions."

When I said "tokens", I meant that picking 1 or 2 sales are tokens, whether it's distressed or non-distressed. Full trend analyses show the influences and any prices variances. You don't need them in your grid. Use the sales that are more reliable in verification and mirror the conditions of market value. If they're the same price of REO,s then your value would be the same anyway. If not, then your value would reflect the correct value. There is no good reason to use a REO sale if you have good selection of traditional non-distressed sales that you can verify.

 

[residentialguy]

State of PA; The median sales price of a non-distressed home was $145,000.The median sales price of a foreclosure home was $70,000, or 52% lower than non-distressed home sales.
Monroe Co: The median sales price of a non-distressed home was $105,500.The median sales price of a foreclosure home was $60,000, or 43% lower than non-distressed home sales.
Lehigh Co: The median sales price of a non-distressed home was $155,000.The median sales price of a foreclosure home was $70,300, or 55% lower than non-distressed home sales.
Northampton Co: The median sales price of a non-distressed home was $158,000.The median sales price of a foreclosure home was $63,000, or 60% lower than non-distressed home sales.
- RealtyTrac

 

[J Grant]

The App[raisal Institute, Fanni and FHA have all come out with statements that REO sales may be used when doing so lead to credible assignment results.

The market tells us what comps to use , s based on what properties are competing with subject . When we make arbitrary decisions to exclude an entire group of sales based on sale type, we are manipulating assignment results. Of course there are many times and reasons where REO comps are not suitable. It is individual to assignment

 

[J Grant]

Marion was correct in her post about use of REO as comps and Res Guy, you have been promoting your personal view about them which is a bias,, dressed up with price references, allusions to compulsion, generic studies of of dis similar properties by sale type etc. Which is why when you have an REO as subject you have to talk your client into a "different" definition of market value , and have even invented your own, "what the subject would sell for as an REO"

 

[J Grant]

I have no idea where you got those stats from in PA but they may include courthouse sales, REO price back to lender, poor condition vs good condition properties etc.

I'd presume Marion knows her local markets well and it would be like someone presenting some generic study of activity in the state of Florida or even my county the results would often be meaningless to any individual market area let alone an appraisal.

 

[Meandering]

State of PA; The median sales price of a non-distressed home was $145,000.The median sales price of a foreclosure home was $70,000, or 52% lower than non-distressed home sales.
Monroe Co: The median sales price of a non-distressed home was $105,500.The median sales price of a foreclosure home was $60,000, or 43% lower than non-distressed home sales.
Lehigh Co: The median sales price of a non-distressed home was $155,000.The median sales price of a foreclosure home was $70,300, or 55% lower than non-distressed home sales.
Northampton Co: The median sales price of a non-distressed home was $158,000.The median sales price of a foreclosure home was $63,000, or 60% lower than non-distressed home sales.
- RealtyTrac

Realty Trac!
Good one!

Our board does not belong to Realty Trac, or Zillow, or Corelogic, or Truilia, so there is no automatic upload feed of listings to these services. What exists there was sent by some individual agents, as a service they pay for, or is cross listed with Corelogic's MLS.

You're also missing Carbon County, which just joined Corelogic's MLS - uploads to Zillow, and missing Wayne County, and Pike County. Pike/Monroe and Northeastern Carbon, check the % of REO sales.

Lehigh and Northampton auto up load to Zillow, which feeds trulia and Realty trac, and are a different market with a different buyer pool. AND, most of their REOs are not noted in the MLS as being such. It's a local talent to pull them from mass data sets by seller, or even by listing agent to know before you call if they are REOs.

So off the bat, you're missing the majority of information. Think sales people pay advertising fees for the lowest priced. hence, lowest commission homes?

Do you pull comps from across counties?
I said I have neighborhoods.
Even though this is not the majority of information, where are the % of sales that are REOs?

Think your BS commercial sites trump living and working here and knowing the market?

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