A few questions on REO Appraisal Procedure

[Webbed Feet]

Webb

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disposition value
The most probable price that a specified interest in real property is likely to bring under all of the following conditions:
1. Consummation of a sale will occur within a limited future marketing period specified by the client.
2. The actual market conditions currently prevailing are those to which the appraised property interest is subject.
3. The buyer and seller is each acting prudently and knowledgeably.
4. The seller is under compulsion to sell.
5. The buyer is typically motivated.
6. Both parties are acting in what they consider their best interests.
7. An adequate marketing effort will be made in the limited time allowed for the completion of a sale.
8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto.
9. The price represents (?) the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

This definition can also be modified to provide for valuation with specified financing terms. See also distress sale; forced price; liquidation value; market value.

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What time period is this definition speaking to? The future, under a "will be?" Or the present, under an "is?" Is this for a "Prospective" analyses or a "Current" analyses? Has this client requested "Exposure" time or "Marketing" time in their request for a reduced time as if, or compared to, the reasonable time needed? "Reasonable" time for a "current" value opinion or "reasonable" time for a "prospective" one?

Ziggy, or Mazzy... ..... If we don't undertand relationships to such things as stable, increasing, decreasing, rapidly increasing, or rapidly decreasing markets .................... as well as the availability of financing relative to all of this, ........ one is very likely to mess up the assignment. If we don't comprehend that any client reduction in "reasonable" is relative to the present slope (or lack of slope) of appreciation / depreciation versus what side of the time line relative to the effective date one is on ("exposure time" versus "marketing time") and therefore fail to demand the client's clearly tell us what they think "exposure" is (before or after the effective date?) ... we cannot properly define the SOW for the assignment.

In my world, there is no such thing as a "Retrospective" listing date. I would never use the word "Retrospective" in describing something like that as for clarities sake I would reserve the use of that word solely for describing the act of opining a value opinion while using a historical effective date for the opinion. A client asking for our opinion of value based on a request for a hypothetical shorter exposure time, than "reasonable," to base a "current" effective date reflecting opinion of value on. .............. is NOT asking for a future "prospective" effective date value opinion based on a hypothetically shortened more than reasonable marketing time. All of this should have been cleared up during the following of the SOW Rule for all four values being requested. Not guessed at over what any "form" has printed on it.

 

[Carnivore]

Now that we are past that one.... ... Your definition of "Deposition" value bothers me. As worded, I read something that is comingling present and future tense.

I took it out of the "The Dictionary of Real Estate, fourth edition, AI for that matter all the definitions came from that book.

What can I say, there are some smart fellars and gals in the organization.

I think your focusing on the actual number of days is confusing you a little. We can seperate them more, I dont have a problem with that. There not set in stone anyway, I stuck them in there as an example of what you get from Fannie Mae(I think they like 60-90) and of some other lenders.

Point is we have to create a second definition by explaining what we are doing. Believe me, I get it on the SOW required communication between the Client and myself in developing the SOW. Problem is most lenders and AMC's are do dumbed down that they dont know how to answer the questions needed for the SOW development. I am serious about that. If you get to technical there eyes glaze over(I can hear it over the phone when it happens).

 

[Webbed Feet]

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Point is we have to create a second definition by explaining what we are doing. Believe me, I get it on the SOW required communication between the Client and myself in developing the SOW. Problem is most lenders and AMC's are do dumbed down that they dont know how to answer the questions needed for the SOW development. I am serious about that. If you get to technical there eyes glaze over(I can hear it over the phone when it happens).

Ok, you got me there!!! LOL Know the problem, oh do I know the problem! It wouldn't take much to swing me over to the idea that all appraisal forms should be outlawed.

 

[Couch Potato]

Ok, you got me there!!! LOL Know the problem, oh do I know the problem! It wouldn't take much to swing me over to the idea that all appraisal forms should be outlawed.

Now your talking real solutions for the state of residential appraisal. :new_all_coholic:

 

[ZZGAMAZZ]

Webbed (#61):

The availability of financing relative to market conditions is a concept I've never heard of before, and it seems like a lending rather than an appraisal consideration.

Granted the term "retrospective list date" could be confusing more so than misleading. However, we are taught that market exposure ends on the effective date but I don't know how to conceptualize the date that exposure begins other than the date that a hypothetical listing would first post.

What do you mean by "during the following of the SOW rule...?

Thanks for taking the time to clarify things...more to follow...

 

[ZZGAMAZZ]

Gosh I just realized that this thread is the grassroots impetus that will debunk and ultimately retire the concept of "market exposure."

Say an opinion of value is $100 and market exposure is 60 days. The property would have sold for $100 on the effective date if marketed for 60 days.

Now say that same opinion of value is based upon 120 days of exposure. In the real world (upon which hypothetical considerations are linked) time would unwind backwards to a day 120 days prior to the effective date; and that would be the list date.

Now say Jim wants to buy a property. He knows where he wants to live, what kind of a house he wants to buy, but most importantly he knows how much he will spend.

The length of exposure time doesn't affect the price Jim will pay for the house; whether the property is listed for 60 days or 120 days doesn't affect Jim's decison, nor the decision of potential buyers in that market niche.

Now if Jim decided to buy a house 90 days ago, the property would have been exposed for 30 days based upon the 120-day exposure, but it wouldn't have been on the market yet based upon the 60-day exposure. Regardless of how long it was exposed, it would have sold for the same price--unless market conditions would have changed during the interim period in time. If conditions were more favorable 120 days prior to the effective date--such as in a declining market--the property would have sold for a higher price, and sooner; HOWEVER that's not possible because exposure leads up the effective date and precludes a retrospective effective date that would have been the result of the impact of the market on the selling price if the property had been exposed longer than "reasonable."

That is to say, the population of potential buyers would not be unduly influenced by market exposure as defined in a retrospective context, as it must be if interpreted literally. Exposure would be appropriate--even helpful--if viewed in a prospective context, although by definition exposure is in the future tense becomes marketing time, rather than exposure.

I think that there is a philosophical term for a concept with no operational definition, let alone no practical application.

Maybe I'm over-analyzing the concept, but it is my experience in organizational behavior that things I don't understand often don't make sense.

 

[kim d miller]

Hey Greg, any suggestions for not getting chump change? lol chump change is not bad when that is all you have. I get only $220.00 from PCV Murcor for REOs, And if you bid higher when the deal comes in, forget it! You lost it. I love reading about your responses, helpful now or in the future. Glad to have a forum to ask questions, cause he guy I trained under is no longer out in the field and can't relate to the current market.

 

[Ray Miller]

Hey Greg, any suggestions for not getting chump change? lol chump change is not bad when that is all you have. I get only $220.00 from PCV Murcor for REOs, And if you bid higher when the deal comes in, forget it! You lost it. I love reading about your responses, helpful now or in the future. Glad to have a forum to ask questions, cause he guy I trained under is no longer out in the field and can't relate to the current market.

I just bid a PCV Murcor PMI Removal for $350 and low and behold they assigned it to me. That is the first one I got from them in months. Simple one that has turned into a pain in the ***. The owner would equal my x-mother in law.

We are into it over the flood map, it says flood zone A, she accepted grant money when her basement flood in 08 with the floods in Reedsburg. I told her all she need to get was certifacation from FEMA that her home is not in a flood plain.

She is also not happy about the value, as she has a BPO in hand, I told her to just sell the house to the real estate agent. It is boosted by some $25,000 dollars on a $93,000 home in a flood plain.

She is also claiming the basement is finished because they had to redue the basement floor after the flooding so that increased the value of her property.

On and On.

 

[Webbed Feet]

It's the engagement.

Webbed (#61):

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What do you mean by "during the following of the SOW rule...?

Thanks for taking the time to clarify things...more to follow...

I missed this and never responded. Sorry.

What I mean is our trade is very often failing to demand that clients clarify what it is that is the client's purview to be clarifying during the engagement phase. When clients have staff members order complex real estate assignments, and those staff members are so untrained/uninformed that they cannot comprehend what they are ordering to the point that the appraiser cannot obtain definitions out of them that are their responsibility to provide..... it should rise to a level of unacceptable assignment conditions. It should never be a case of "We want this form, why don't you understand how to fill it out?" back at us when it is their job to comprehend that what they are ordering takes defining elements of that order on their part.

Like I said, outlaw the forms. If they had no "Form" to order how would they order it when they don't so much as comprehend what they are ordering? For private party work, when I have questions the private parties try to answer them. With many mortgage sources they have staff that seem to think appraisers should all be able to read their minds, so as not to bother taking up any of their time. The problem is caused by the appraisal trade itself, because we allow them to get away with that. Versus place a demand on them that they either cooperate or they are not going to get anyone to accept their stupid meaningless orders that lack required information out of them before it should be started.

 

[Webbed Feet]

Hey Greg, any suggestions for not getting chump change? lol chump change is not bad when that is all you have. I get only $220.00 from PCV Murcor for REOs, And if you bid higher when the deal comes in, forget it! You lost it. I love reading about your responses, helpful now or in the future. Glad to have a forum to ask questions, cause he guy I trained under is no longer out in the field and can't relate to the current market.

Sure! If one leaves oneself with the only solution one has to obtain more work is to devalue oneself, it is no wonder when one must do so in order to obtain more work.