Distressed Properties were used for all comps!

[Lobo Fan]

So because 75% of the market are lender owned sales, the home occupied owners selling their homes are over market value and the market buying those homes are to be adjusted down to REO prices? Do you understand what you're saying? Do you know what would happen to the market when an appraiser won't validate the market sale of a typical homeowner? Seriously...think man. The homeowners would tell the bank that if they won't recognize a sale without undue stimulus and they will have to lower their price to REO prices...they'll throw the bank their house keys and say, "You sell it if you won't allow me to sell home occupied homes at what the market will pay for them.

You're giving the most probable the home would sell IF it were a Bank owned property.

It is not my concern. I am here to determine the most probable price not some fantasy number. If REOs dominate the market, then that is the market. IMHO.

 

[Scott R Marshall]

OK, but appraisers are being sanctioned for not using distress sales as comps in areas as low as 25% of the market. Why would you adjust upwards? The substitution rule would negate that. There might be some market resistance to the time lags created by short sales, but they are still the market. Using only non-distress sales could be considered to be misleading. IMHO.

Based on your argument, if the principle of substitution rules, then why in those 20% to 25% of non-distressed sales, did the buyers not opt to either buy one of the distressed sales or demand that they pay no more for it than for a distressed sale property. In addition, the very form you are signing for 99% of mortgage related work has a definition of market value that would be contrary to most bank owned and short sale transactions. If you are providing them only bank owned or short sales, disregarding non-distressed sales or not making an appropriate adjustment to your bank owned or short sale properties, what you are providing is something other than market value.

ResGuy has it right. You might as well then make a negative adjustment to your non-distressed sales.

 

[residentialguy]

It is not my concern. I am here to determine the most probable price not some fantasy number. If REOs dominate the market, then that is the market. IMHO.

Better start being your concern. You're giving the value opinion of a home with undue stimulus to sell...more in the line of Liquidation value. That's not what the client asked for, therefore it's a misleading report.

 

[Lobo Fan]

That is a good question. An REO or short sale cannot be construed as undue duress. The banks know exactly what they are doing. Why do some people shop at Nordstrom's and others at Wal Mart. The blue jeans are the same.

 

[residentialguy]

Hmmm...if I lived in a neighborhood where 75% of the sales were owned by extremely famous people that when they sold their house it sold for 15% more because of them being famous, according to Lobo, "they are now the market", therefore the MV of my home just went up 15%, even though I'm not famous. woohoo

 

[residentialguy]

That is a good question. An REO or short sale cannot be construed as undue duress. The banks know exactly what they are doing. Why do some people shop at Nordstrom's and others at Wal Mart. The blue jeans are the same.

I said undue stimulus, not duress.

 

[JSmith43]

That is a good question. An REO or short sale cannot be construed as undue duress. The banks know exactly what they are doing. Why do some people shop at Nordstrom's and others at Wal Mart. The blue jeans are the same.

The Principle of Substitution, applied in the context of real estate economics, means that a buyer will tend to not pay more for a property than an equally desirable alternative. In other words, do REO alternatives offer equal utility and satisfaction to the buyer?

Do property disposition offerings by lenders yield the same utility and satisfaction as the other sales where the seller is not known to be under a compulsion to sell?

Assuming condition can be set aside, the nature of a REO sale may be perceived as having a different set of risk factors, by a well informed buyer. An appraiser really has to test for a difference.

If there is a difference, it must be accounted for somehow, no? Declaring that REOs "are the market" is best left for politicians. Appraisers can test the market to determine how useful REO "widget" sales are at predicting MV for a subject, as defined. They may require an adjustment for condition of sale that is so large as to not make the cut as a useful indicator of MV in a comparison grid.

If an indicated condition of sale adjustment is not so large, it may make the cut as one of the best comps.

 

[Lobo Fan]

Hmmm...if I lived in a neighborhood where 75% of the sales were owned by extremely famous people that when they sold their house it sold for 15% more because of them being famous, according to Lobo, "they are now the market", therefore the MV of my home just went up 15%, even though I'm not famous. woohoo

Well yes I guess that is true. It is the price for having TMZ stalkers hiding in your hedge.

 

[PropertyEconomics]

That is a good question. An REO or short sale cannot be construed as undue duress. The banks know exactly what they are doing. Why do some people shop at Nordstrom's and others at Wal Mart. The blue jeans are the same.

This absolutely an incorrect statement. I strongly urge you to reconsider your position since it demonstrates how very far from understanding the meaning of duress and undue influence you truly are.

Unfortunately the appraiser who completed the appraisal for the OP purchase apparently held the same belief .. and is also just as wrong.

Please STUDY the definition of MARKET VALUE ..... based on your posts you may well have been providing a good number of misleading appraisal reports if the purpose of their creation was to provide an opinion of MARKET VALUE ....

 

[Lobo Fan]

5So if the local market is in decline due to a large number of REO and shorts, I am supposed to artificially inflate the value of my subject? 75% of the market is a very significant segment. The FDIC and the California state board are sanctionng appraisers for doing what you are proposing here. If you want to get a colonoscopy from the FDIC one day, then that is your choice.