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Bank owned property sales

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Kevinm

Thread Starter
Freshman Member
Joined
Jan 27, 2008
Professional Status
Certified Residential Appraiser
State
North Carolina
I am finding more properties that banks are selling to individuals. Most clients and individuals are thinking they should appraise for more than they are under contract for. You know, make the buyer think he is getting a deal. My clients are needing these appraisals on URAR 1004 forms. They seem to think that I should only use sales that are from individuals to individuals and not banks to individuals. However, the home I am appraising is a bank sale to an individual. Which type comps should I use? I feel like if I need to use Bank sales to individuals because this would be best. But try telling that to the client. Does anyone have a good written source I can go to and use to show my clients as to what is correct? Thanks:new_llying:
 

Kevin Keck

Junior Member
Joined
Jun 2, 2006
Professional Status
Certified Residential Appraiser
State
Ohio
Deleted by poster with apologies to original poster.

I was attacked by the sarcasm virus and I'm suffering from diminishing client base.
 
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Zmcraney

Junior Member
Joined
Oct 17, 2007
Professional Status
Licensed Appraiser
State
Mississippi
You should only use those comparables that enable you to appraise the property at purchase price. Never appraiser above or below the purchase price. It is only your job to facilitate the loan. It is not your job to accurately reflect the market value of the home by selecting comparables that are similar to your subject in age, condition, design, and location. Again, only select comparables that enable you to appraiser the property at purchase price. Make no distinction between those sales that are arms-length and those sales that are not.

You must be smoking on that hippie lettuce tonight:Eyecrazy:
 
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Scott Lanz

Member
Joined
Dec 13, 2002
Professional Status
Certified General Appraiser
State
Minnesota
You should be using any sales that are comparable to the subject. There are adjustments for conditions of sale that you can address if you feel the bank sales were below market.

I would be completely uninterested in somebody else's opinion of which sales you should use.

and Mr. Keck,

Can you give me the ratio of unicorns to fairy dust?

Scott J. Lanz
 

Tom Woolford

Elite Member
Gold Supporting Member
Joined
Nov 20, 2005
Professional Status
Certified Residential Appraiser
State
Florida
You should only use those comparables that enable you to appraise the property at purchase price. Never appraiser above or below the purchase price. It is only your job to facilitate the loan. It is not your job to accurately reflect the market value of the home by selecting comparables that are similar to your subject in age, condition, design, and location. Again, only select comparables that enable you to appraiser the property at purchase price. Make no distinction between those sales that are arms-length and those sales that are not.

WTF?????:new_all_coholic: :new_all_coholic:
 

Zmcraney

Junior Member
Joined
Oct 17, 2007
Professional Status
Licensed Appraiser
State
Mississippi
I believe it would depend on the client and the purpose of the appraisal as far as what comparables to use.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
Don't know of anything written, but I find there is a stigma attached to REO properties and they usually set a market all their own.

First, when listing an REO property lenders usually use the same sales agents in a given area. These agents specialize in REOs and the buyers that go to them are usually investor buyers. Sales agents who do not specialize in REO properties usually have private owner listings and do their best to show those houses to prospective buyers, skipping over the REO.

Second, residential home purchases are 99% emotional 1% thought-out. Okay, maybe I am exaggerating it a bit, but not that much. When you are looking at a foreclosure you have to have the idea that "someone elses loss is your gain". Emotionally that leaves you at best ambivalent. Your head takes over the buying process and the buyer begins to try to meet out a deal. But when buying "the perfect house", in nearly any market, the buyer wants "that" house and will emotionally go out on a limb to get it. Even though in a down market a seller will be more accomodating to get the deal done, they will still get more than the bank unless the market has totally tanked.

Using REO properties to appraise REO sales is a good idea, especially when those properties went through the MLS and sold on the open market.
 

Zmcraney

Junior Member
Joined
Oct 17, 2007
Professional Status
Licensed Appraiser
State
Mississippi
it doesn't seem to me that an r.e.o. would qualify as a typical seller under the definition of market value. It all goes back to who your client is and what the purpose of the report is.
 
Joined
Nov 7, 2005
Professional Status
Certified Residential Appraiser
State
Florida
Look at the comparable listings. I have been seeing lots of REO properties and short sales that are in good condition - several that are brand new, never been lived in.
In some parts of my market, REO and short sales are the market. I look at value based on the principal of substitution within the open market. Are the buyers in you market informed? An informed buyer, at least here in Central FL, is considering these types of properties to purchase. Just make sure you are using truely comparable homes in the same condition. Talk to the realtors and look at them closely.
 
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