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Divorce / Value to sell within 90 days?

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Green Hornet

Thread Starter
Senior Member
Joined
Dec 29, 2006
Professional Status
Certified Residential Appraiser
State
Washington
How would you handle this?

A RE Broker calls. He is getting a divorce, the house has been listed for 4 months and the wife now wants it sold within 90 days.

He wants an appraisal that provides a value that would help the home sell within the 90 days. The appraisal is to help him with a listing price and to help provide shelter in case his wife gets POed at the list price. Should not be a problem, but who knows with divorces.

He thought it would just be an easy value range similar in difficulty to a BPO.

I explained USPAP, etc. If nothing else it was a good opportunity to inform someone in the RE sales field about appraising.

I have been researching to see if the market applies a discount for homes sold within that time frame. The average DOM for sale in the last 3 months 88 days, so not an issue for adjustments. But, pendings and actives have average DOM of ~150, so, some discounting might be necessary.

Values within the subject's market appear to be stable.

Researching this has been an educational experience and once again shows me the dfference between what I think I know and what I really know :(

So here I am. My thought is to complete this on the AI 1001 or a GP form using Disposition Value instead of Market Value. I have not completed a narrative report, but that is also an option.

If necessary, I do have access to appraisers with experience in this type of work, but I like to be as prepared as possible before approaching them.


Your thoughts please.

Thank you.
 

DWiley

Elite Member
Joined
Apr 4, 2007
Professional Status
Certified Residential Appraiser
State
Tennessee
If the value opinion is based on a limited marketing time, you need to consider whether "Market Value" is the appropriate value standard. It may be a "quick sale value."

Remember that USPAP requires a Summary Report to include the definition of value along with a citation of the source of the definition. This is a common oversight. I have been reviewing a lot of appraisals for liquidation value where the appraiser neglected to cite the proper value definition.
 

David Sawyer

Member
Joined
Mar 8, 2008
Professional Status
Certified Residential Appraiser
State
Florida
I have had similar SOW assignments. Yes, I do them on the GP and do them no different than I would do a ERC relocation appraisal (I charge the same as a ERC)with the exception that it is standard on a ERC to forecast down the road 120 days unless the client specifies different.

Look the form over for the ERC and "lean" along these lines.
 

Green Hornet

Thread Starter
Senior Member
Joined
Dec 29, 2006
Professional Status
Certified Residential Appraiser
State
Washington
DWiley and David,

Thank you for your input. Both are very helpful.

It appears I have started down the right path.
 

Metamorphic

Senior Member
Joined
Mar 15, 2008
Professional Status
Certified Residential Appraiser
State
California
You know, I've played with several different methods of deriving a "motivated seller" discount rate. I've indexed and plotted normals vs reos vs. shorts, I've done DOM analysis, I've looked at the difference between sales prices of vacant and occupied properties (that's on the theory that a vacant property is costing somebody money and the motivation to sell will be reflected in that negative cash flow).

But if you really really want to sell it fast (we're talking "actually have to move the darn thing" vs. "theoretically what would keep it from spending a long time on the market) I think there's no better method that the brass tacks method. You look at the 5, 10,.... whatever most similar properties currently listed in the MLS and price it enough below the cheepest one of those that you'd have to be an idiot not to make an offer immediately if you're in the market.

Actually selling a property right now vs. a theoretical short market time value means you have to undercut the competetion that are on the market at that very moment which is a very "knowable" thing. What's the point in postulating a discount rate when the hard facts are right there to be had.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
I would get the request in writing. This is for a divorce and I would want to have exactly what I was asked to do in writing before I would take on the assignment.
Lets assume for a moment, its not the wife that wants a 90 day marketing time, and lets assume for a moment that the husband is going to purchase this from the wife at the discounted price. Not saying thats the case, but if I got called into court Id sure want to be able to show the request in writing to the judge.

Nothing is fair in love and war and seldom are things as they are said to be. Simply be careful.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Another poster offered that you give consideration to the ERC report form. I'll take it a step further: you may want to consider using the ERC's definition of value (Anticipated Sales Price). Review what is in the ERC form regarding the definition of ASP and discuss it with your client.
 

Green Hornet

Thread Starter
Senior Member
Joined
Dec 29, 2006
Professional Status
Certified Residential Appraiser
State
Washington
Met,

I was thinking the same thing when I began this assignment. The old adage of keep it simple.

From a practical point of view I agree with you. I would love to put the appraisal in a letter form and include the logic you presented.

A simple scope of work, identify the active listings and present a small range of value. It could be such a rational process.

Then I remember USPAP and the layers it adds.

Could this type of assignment be completed in a simple, USPAP compliant fashion?

Thinking inside the box...it would be safer to stick with peer accepted practices.
 

Metamorphic

Senior Member
Joined
Mar 15, 2008
Professional Status
Certified Residential Appraiser
State
California
You can always execute a peer accepted practice, then compare it with the results from a method like we're talking about. Doesn't have to be and either/or.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I'd give them at least 2 values: Market Value, normal exposure and marketing time; and Quick Sale, must be gone in 90 days... with lots of discounting to attract a cash investor (think foreclosures, that's what you will be competing against). Also keep in mind to look at current listings. They tell as much, if not more, about the market now daze.
 
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