Disposition Value Form

[Meandering]

Update: I declined order: Just came on market again. Assume another appraiser set the new list price to sell in 90 days. Price is $395K.

Nice job appraiser #2, didn't sell at $299K but will sell at $395K.

Sounds like the work of a BPO to me.

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[Deleted member 134708]

No reason to not think it was re-assigned to another appraiser after I declined it.

 

[Meandering]

Easy enough,

Call the listing agent and ask if the list price is representative of their BPO. If not, ask them what they think of the price.


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[residentialguy]

When it comes to REOs , most appraiser's are as clueless about the order as the ones ordering the appraisal.

 

[J Grant]

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.

Focusing on this aspect...just because an REO sells for 14% less ( the above ), DOES NOT mean it sold for disposition value. The market exposure/time and marketing effort are very different in MV (market value) versus DV. (disposition value). DV definition references a severely limited marketing effort and must consummate ( close ) on the property within a severely limited time frame .

An REO, or any property for that matter, selling under the terms of disposition value in above scenario would likely not sell for 359k, it would sell perhaps for 200k. Because in DV it would not be exposed to open market and for typical exposure as the REO was, it would be marketed at auction or newspaper ad and sold in 3 -10 days (or example) , sometimes without an interior inspection permitted. When sold for DV, the property CLOSES in X limited days, not just brings a price as in MV definition. That means a property bought at auction or quick sale, buyer must pay full amount in 24-48 hours after bid or the property goes to the back up bidder.

Appraisers need to be far more careful in assuming a client "needs" DV when ordering an REO appraisal. Some might say the above REO only sold for 359k despite what they deem a "too high" MV price, however, if it did not have that MV price, and MV estimated exposure time, it might have sold for far less, thus doing a dis service to the client.

In addition, a client can use the difference between a MV price on an appraisal and any lower price on sale for tax or accounting purposes. Deprive them of a MV opinion and they have a problem if audited. Appraisers are misinformed who think their client "really needs " DV, when the client is ordering a market value purpose appraisal, the client has their reasons for doing so. .

 

[Terrel L. Shields]

In commercial work one might argue an "orderly" disposal vs. "disorderly" disposal.

 

[J Grant]

But it's not commercial work, these queries are seen repeatedly from res license appraisers referencing res properties where the lender orders a MV appraisal and appraiser insists the client "really" needs DV and meanwhile has an incorrect idea of the terms and definition of DV.

 

[residentialguy]

They need to have an REO form with client option for desired days on the market. It's just ridiculous that they don't.

 

[residentialguy]

But it's not commercial work, these queries are seen repeatedly from res license appraisers referencing res properties where the lender orders a MV appraisal and appraiser insists the client "really" needs DV and meanwhile has an incorrect idea of the terms and definition of DV.

Disposition value is much closer to an REO sale than MV. While it suggests a quick sale, it doesn't provide a max time limit, so the client is able to set what that is. Lenders want to dump the place right away. Every day is taking money from them without anything given back.

 

[J Grant]

They need to have an REO form with client option for desired days on the market. It's just ridiculous that they don't.

The REO addendum has a second market value opinion in a client imposed time range ( 60-90 days, for example)