Disposition Value Form

[Deleted member 134708]

Have a requested 1004 w/ REO addendum. Special instructions are "the client is ordering appraisal to help determine a list price"

REO's sell for much less in this neighborhood, about $40-$60K less. ~75% of properties sell within 90 days.

1004 form nor REO addendum suits this clients needs as they are not searching for market value but disposition value. Example, in this same town but different neighborhood an REO was listed for $425K and sat for 150 days. Was in similar condition and size of other homes that sell for $415-$430K. Ended up selling for $359K. Asked realtor about initial pricing and final pricing, said "banks appraiser set the price" and sold much less because it's an REO.

Obviously the wrong product was ordered or wrong service was given.

So I don't do a disservice, what form do I use?

 

[residentialguy]

You MUST to contact your lender. MV as defined on the 1004 (as well as REO supplemental) has nothing to do the most probable price of a REO sale. A liquidation form is the appropriate form. Make sure you get the answer in writing!

 

[Deleted member 134708]

Little update. Looked at listing history on this house was listed in August 2014 for $405K as an REO and taken off market in January 2015 for $299K. No clue who set $405K but seems like that was pretty close to a "market value estimate" which didn't do the bank/owner any good.

 

[Deleted member 134708]

@residentialguy

Yeah, it comes with a whole special instructions sheet saying they need the appraisal for listing/selling purposes. They just ordered it on a 1004 w/ REO addendum is all. I'm just trying to get some feedback on what type of form I'm going to tell them it needs to come on because what they ordered and want are 2 very different things.

 

[residentialguy]

Exactly the problem of REO orders ...they aren't ordering the correct appraisal and appraisers aren't communicating to verify. This has been a real problem and hurts the value and hurts the lender, as a vacant house is not returning anything...it's just taking from them.

 

[residentialguy]

I did one for US Bank recently and put it on a Liquidation Value form. They started the same way, ordering a 1004 w/ Sup REO. I called the head of the REO Dept and confirm that they wanted the most probable price the property would sell for as a vacant REO sale.

 

[J Grant]

How do you know the client "wants" disposition value? You better ask them and not assume it because you see REO's selling for much less in your market.

BTW an 1004 assignment with REO addendum typically appraiser provided two values, market value on the 1004 and a quicker DOM sale value , like client imposed 60-90 daysm for example on the REO addendum.

Are the REO's that sell for less in inferior condition, are they being fixed, flipped and re-sold, why are they selling for so much less, and are they ALL selling for that much less?

 

[J Grant]

@residentialguy

Yeah, it comes with a whole special instructions sheet saying they need the appraisal for listing/selling purposes. They just ordered it on a 1004 w/ REO addendum is all. I'm just trying to get some feedback on what type of form I'm going to tell them it needs to come on because what they ordered and want are 2 very different things.

How do you know what they want? Have you asked them?

 

[Deleted member 134708]

They want the price it will sell for as stated in their special instruction on "purpose of appraisal."

So technically I would start it out on a 1004 form for about the 1st hour, then very quickly see that a 1004 form and market value is not what this property will sell for.

A quick and dirty spreadsheet in the neighborhood has 4.2% REO's sold in past 3 months. REO's v. non sold for -11% less. REO's in similar condition these days. I haven't come across one that was destroyed in a long time.

 

[residentialguy]

They want the price it will sell for as stated in their special instruction on "purpose of appraisal."

Who did you talk to? You need clarification from the lender, not the AMC