Bank Owned Comps.

[LT3appr]

The only recent sales that come up are bank owned. I haven't yet used any of these for comps. Today all I have are bank owned coming up as only recent sales.

What do you say to justify using only bank owned as comps? What adjustment might be made?

 

[toddmallard]

Why adjust? It seems that this is your market.........

I would not go over the forclosure or short sale values, just because the subject may not be a forclosure or short sale.
How about the actives and pendings?

 

[JRS at OBX]

A report I sent out a few months ago had 4 bank sales out of 5 comps used. It's the market in that neighborhood. If I was a typical buyer, I would be considering the bank sales just like the non-bank sales.

The only difference between a bank sale and a non-bank sale (in my area) is that some of the bank sales require a little more qualification and they transfer by special warranty deed.

Now if some of the bank sales are in poor condition, an adjustment might be required, but that is no different from a non-bank sale that is in poor condition.

Always call the agent, especially if it appears to have sold low. There might have been a condition issue or somebody might have gotten a good deal.

 

[hglenbetts]

The only recent sales that come up are bank owned. I haven't yet used any of these for comps. Today all I have are bank owned coming up as only recent sales.

What do you say to justify using only bank owned as comps? What adjustment might be made?

The comp sales reflect the most comparable properties within the subject neighborhood. All sales were exposed to the market for an adequate period to validate a predominate trend in value.

Or something like that:blush:

 

[Flygirl 152]

If the only comps that are coming up in your subjects neighborhood are REO's and short sales, then your market is likely REO and short sale driven.

"The subjects market is REO and short sale driven due to recent market volatility. Therefore REO and short sale properties are utilized on the market grid."

 

[Michael Tipton]

If the market alternatives are REO properties, then your market is REO sales, pendings and actives. Certain market segments in Florida are also predominately REO sales.

 

[Smokey Bear]

We need to be a little more precise here. Are you talking about foreclosure sales where the bank has taken back the property, or REO sales where the bank is SELLING the property? This former is not an arms length sale and can't be used. The latter needs to be looked into, to see if it's an arm's length sale. REO sales might or might not make good comps depending on the sale conditions.

 

[Mike Boyd]

A report I sent out a few months ago had 4 bank sales out of 5 comps used. It's the market in that neighborhood. If I was a typical buyer, I would be considering the bank sales just like the non-bank sales.

The only difference between a bank sale and a non-bank sale (in my area) is that some of the bank sales require a little more qualification and they transfer by special warranty deed.

Now if some of the bank sales are in poor condition, an adjustment might be required, but that is no different from a non-bank sale that is in poor condition.

Always call the agent, especially if it appears to have sold low. There might have been a condition issue or somebody might have gotten a good deal.

Also, REO sales are "as is" and there are no disclosures required. Sometimes, and Terrel will know the phrase, it's like buying a pig in a poke.

 

[hglenbetts]

We need to be a little more precise here. Are you talking about foreclosure sales where the bank has taken back the property, or REO sales where the bank is SELLING the property? This former is not an arms length sale and can't be used. The latter needs to be looked into, to see if it's an arm's length sale. REO sales might or might not make good comps depending on the sale conditions.

Smokey,
Absolutely right. Here in Michigan the deed would be a "Sheriff's Deed" this is where the bank "buys back" the property at the Sheriff sale. That sales price usually reflects what is owed the bank by the owner, and especially here in Michigan, has nothing to do with the value of the property.

(That was for the newbies in the group)

 

[Michael Tipton]

Last I checked, REOs are foreclosed or dead in lieu dwellings owned by a financial institution.

They can be marketed however the financial institution decides, lists are available to the public upon request. They are marketed with/without exposure to the public via MLS or auction. It is not unusual for REOs to be listed and sold via MLS locally.