Appraising occupied REO for Re-Sale

[leonbernie]

Anyone have this scenario before? Foreclosed reverse mortgage. Family members are still in the house despite bank having taken over. They want a re-sale value to market the property as-is including being occupied. Maybe will end with a cash for keys situation after the sale but not sure. Assuming finding occupied REO comps is going to be near impossible, just looking for takes on this situation.

Thanks

 

[glenn walker]

Its not really the same as Vacant REO - HUD works with the families to list and sell them at market value. I would just treat it like any other, and find comparables that are in similar condition and be done. My experience is most Revere sales are C-4 Average condition and some have dated kitchens and baths etc.

 

[Charles West]

Its not really the same as Vacant REO - HUD works with the families to list and sell them at market value. I would just treat it like any other, and find comparables that are in similar condition and be done. My experience is most Revere sales are C-4 Average condition and some have dated kitchens and baths etc.

That's what I was going to say, most need remodeling. Lots of pink bathrooms.

 

[sputnam]

Is your assignment to determine the value, as defined, of the fee simple interest in the real property? If it is, the occupancy doesn't matter. What does matter is whether you can access the property for an inspection or not.

 

[Tom D]

occupancy may matter to the seller. easier to sell if vacant. if occupants don't cooperate, it will take an eviction. the buyer with uncooperating tenants will pay less because of the time & costs to evict. my experience from buying vacant REO properties was that there always were unseen problems from sitting vacant for a long time. you can only value the property, not the occupancy. the seller will decide what to eventually accept if for after it's marketed for a reasonable amount of time.

 

[J Grant]

Anyone have this scenario before? Foreclosed reverse mortgage. Family members are still in the house despite bank having taken over. They want a re-sale value to market the property as-is including being occupied. Maybe will end with a cash for keys situation after the sale but not sure. Assuming finding occupied REO comps is going to be near impossible, just looking for takes on this situation.

Thanks

Are you SURE that "occupancy" is a component of the assignment? Don't assume that it is, ask your client to specify it.

Because the Market Value definition and certs are for legal title and passing of title, and assumption thereof with appraisers not to concern themselves with legal title matters (such as occupants preventing sale or new owners from moving in/posesion )

The assumption that the search for comps would need to be occupied REO comps sorry to say indicates lack of competence to do the assignment. I am not trying to be snarky, I am being realistic because that is inane - comps for market value are considered as having legal title to sell and whether or not they are owner occupied is not a consideration, unless the client specifies it as an assignment condition which I'd bet $ on this client has not done.

 

[leonbernie]

Thanks for the replies, when talking to the access contact, (who is the agent who will list the property), the access will be possible, I've done plenty of these before but never where there are basically squatters there and seems like the client is wanting an opinion of value if sold with squatters. I'm assuming the squatters are the family of the prior owner. If I can basically ignore the occupancy I have no problem. I could do something like an across the board cost to cure adjustment for the estimated cost of eviction, or cash for keys cost, which I think may be the most reasonable way to handle it. The eventual buyers will have to get the squatters out of there somehow and will assume that cost when purchasing much like they would assume whatever major repairs would have to be done.

 

[J Grant]

Thanks for the replies, when talking to the access contact, (who is the agent who will list the property), the access will be possible, I've done plenty of these before but never where there are basically squatters there and seems like the client is wanting an opinion of value if sold with squatters. I'm assuming the squatters are the family of the prior owner. If I can basically ignore the occupancy I have no problem. I could do something like an across the board cost to cure adjustment for the estimated cost of eviction, or cash for keys cost, which I think may be the most reasonable way to handle it. The eventual buyers will have to get the squatters out of there somehow and will assume that cost when purchasing much like they would assume whatever major repairs would have to be done.

This is ridiculous to assume it, ask your client and you need to get the answer from them.

Now you are referencing making an adjustment for keys for cash adjustment as a cost to cure. How did you do plenty of these before - were you using REO comps because the subject is an REO on your prior REO or pre foreclosure appraisals?

It would be an assignment condition to to assume the eventual buyers will have to get the squatters out, which is highly unlikely it would be sold that way. The client has the answer to that..

 

[leonbernie]

Are you SURE that "occupancy" is a component of the assignment? Don't assume that it is, ask your client to specify it.

Because the Market Value definition and certs are for legal title and passing of title, and assumption thereof with appraisers not to concern themselves with legal title matters (such as occupants preventing sale or new owners from moving in/posesion )

The assumption that the search for comps would need to be occupied REO comps sorry to say indicates lack of competence to do the assignment. I am not trying to be snarky, I am being realistic because that is inane - comps for market value are considered as having legal title to sell and whether or not they are owner occupied is not a consideration, unless the client specifies it as an assignment condition which I'd bet $ on this client has not done.

I will clarify that "occupancy" is a component of the assignment, however the listing agent who is the client's contact indicated as such. Yes, I know the listing agent is not my client. I understand your point in regards to market value definition and the certs. which is a way to ignore the occupancy, however, the property as-is is illegally occupied and the sellers do not plan to do anything about it prior to transfer of title. Certainly this influences what fair market value is. I'm not seeing how coming up with a defensible market reaction number for the purchase of an illegally occupied property versus a vacant property demonstrates a lack of competence. The client is looking for a reasonable listing price. All of this assuming "occupancy" is a component of the assignment which I will clarify with the client.

 

[J Grant]

I will clarify that "occupancy" is a component of the assignment, however the listing agent who is the client's contact indicated as such. Yes, I know the listing agent is not my client. I understand your point in regards to market value definition and the certs. which is a way to ignore the occupancy, however, the property as-is is illegally occupied and the sellers do not plan to do anything about it prior to transfer of title. Certainly this influences what fair market value is. I'm not seeing how coming up with a defensible market reaction number for the purchase of an illegally occupied property versus a vacant property demonstrates a lack of competence. The client is looking for a reasonable listing price. All of this assuming "occupancy" is a component of the assignment which I will clarify with the client.

You still don't get it, and are prepared to make occupancy an assignment condition based on the listing agent?

Fine, do it that way, because frankly this kind of reasoning and refusal to ask your client directly imo addresses competency which would recognize that MV is based on a clear passing of title ( which means not sold with occupants who would block access/occupancy )

How do you know your sellers "do not plan to do anything about it prior to transfer of title?" That seems to be an assumption and would need confirmation by the client. Again, you are assuming occupancy is a component of the assignment - at least in the last sentence you agree it would need to be clarified with the client.

If occupancy is a component, imo then it is not market value because market value is not a passing of clouded title with occupancy issues -