Deferred maintenance / REO Property

[Mztk1]

The appraiser has little control over what the house gets listed for and what it is sold for. The agents hold most all the cards. I had one that I pinned down at $190 or so and it contracted with 10 days for that amount. Those contracts fell through and the agent sold the house again for mid 150s one month later. That has nothing to do with me or my appraisal. I have another that I appraised in early September for $216,000 that they listed for $259,900, went one week and dropped it to $239,900 and it still sits vacant at $239,900 nearly four months later. Don't know what it is worth now. But grading me based on what it sells for compared to what I appraised it for has little bearing on my accuracy.

Let REO companies do what they do. You just do your best possible job under the assumptions that are made in your limiting conditions and scope of the assignment (which on the form they are asking for typically, 1004, the limiting conditions, etc., are your scope of work).

The last thing you want to know is the motivation of the client. Some want a low ball appraisal to say the secondary lenders lien has no standing, some what a high ball appraisal because they are the secondary lender. Others just want to know what to list it at to sell, and sell it quickly. My job when doing one is to estimate the value under the scope of work provided. My scope of work on a URAR does not include estimating cost and accounting for unseen damage or unknowable damage t the building.

 

[Kevin A. Spellman]

The REO companies that I currently service have both a CMA from a potential listing agency and my appraisal. A listing agents does not have all the cards, they have to perform also. If they do not sell the property, they do not get another listing contract from the REO companies and by the way the REO companies participate in the commissions.

The last two REO I have done were listed $10,000 higher than my appraisal. The REO do not get their money until it sells. Their fees are from the commissions. So if the appraiser and the listing agents do not recognize and measure the current market conditions and in respect the REO Addendum with its 120 days exposure you have not provided a reliabel service.

The person who makes a decision to accept or reject an offer for a REO typically never sees the properties or talks to the buyer. They are relying upon the information in the appraisal report and with the listing agents. An appraiser responsibility is to understand the land value and how much the improvements contribute to the total value. If you cannot measure the contribution of the improvements with the understanding of defects and deficiencies your service may not have value to an REO service provider.

The REO Company will make the listing agent require a potent ional buyer to sign an Addendum for the presence or the absence of mold. The seller will be excuse from any responsibility for the mold. Unfortunately the appraisal you provide must discuss the impact on marketability and value if you believe there is mold.

Here what a buyer did. They chose to remove the basement finish at their costs. Here are the before and after photos.

 

[DTB]

If you want to be recognized as a good REO appraiser, your abilities to define and discuss defects and deficiencies must be presence in your reports. The values must also be reasonable and sell within the preferred maximum of 120 days.

Most REO service providers measure appraisers between the market values in the REO Addendum and the future sales price. I have been told the REO service providers could loose an account if the sales price is greater than 10% less than stated in the REO Addendum.

A lot of guys losing their gig around here then, I only buy 30% below appraisal-max.

Even less when I see the 250 DOM.

 

[Couch Potato]

Just do it.

Hi Otis,

The SOW is four values.
1) As is typical marketing time
2 As repaired typical marketing time
3) As is for quick sell (90 days or less)
4) As repaired quick sell (90 days or less).

So give them what they ordered. In each case you will need to describe the repairs you know are necessary, the repairs you assume are necessary and those you assume are not necessary. Make your reasoning clear to the client, and offer suggestions for confirming your assumptions. With construction experience, it should not be that difficult to estimate the repairs. The hard part is making your descriptions clear to the client. They need to be specific enough to be understood, but general enough to not invite a law suit.