Guidance On How To Appraise

[gregb]

Very limited number of Fannie REO properties in most counties:

https://www.homepath.com/state/ca

 

[J Grant]

Nottrav "]You are 100% correct. But REO's value are $50K less than non-REO. So my question is do you want the value it will sell for on the effective date or do you want the value it will sell for if it was a hypothetical REO today?

We touched on this on that "other " marathon thread...Appraisers are supposed to do exactly what they/we are engaged to do- provide an opinion of market value, when that is the purpose of assignment. The assignment is not "what it would sell for as an REO"
If a client wants what it will sell for under forced /discounted sale/shorter DOM condition,, they would ask for that as purpose of appraisal or as an additional second value opinon. But they are not asking for that.

Read the MV definiotn . It does not say what the property will sell for. It says, the most probable price the property should bring ( per the presumed sale in the appraisal), Furthermore , the MV definition is slightly retrospective, in that it says passing of title as of effective date ( The presumed sale "closes" as of effective date, therefore it is not what it will sell for)

We agree so hold on.

I truly believe the lending system isn't set-up for REO properties and or appraisers and lending system aren't on the same page. We strictly follow MV where lenders ask for a 1004 as they are set up to intake but really truly want a hypothetical REO transaction

No, they do not "truly want a hypothetical REO transaction"....they want MV under terms defined, assuming that is purpose of assignment, and this client clearly says it is purpose of assignment is MV

price. I truly believe they want to know what to list this for as an REO. Problem is that's not what a 1004 communicates and the system isn't set up to take my appraisal on a word document"

No, they don't want to know what to list it for as an REO. Don't you think the client would state that if that is what they wanted? Likely the client is getting an opinion or opinions from RE agents/ brokers what to list for, and want a MVO from an appraiser . . If you are struggling with that, then you are correct in turning down these assignments.

 

[J Grant]

They may want a MV opinion from appraiser for any number of reasons, including to compare to a RE agent list price opinion, or to claim a loss on their books for auditors.

Appraisers do the client a dis service if they think they should try to figure out what the client "really wants", when the stated purpose is a MV opinion.

 

[Deleted member 134708]

No, they don't want to know what to list it for as an REO

Yes they do, just thru a tool though.

"determining the list price of a HUD PFS Property"

 

[J Grant]

THEY use the MVO as a "tool" to determine the list price...which is not the same as them asking you for the list price .

They may use the market value opinion to determine, for example, whether to discount the property from MV for a list price, (if they are so inclined), or to compare it to list price opinion from a RE broker/agent, or to decide which offer to accept.

The PURPOSE of the assignment is provide an opinion of market value. The purpose is not to determine the list price of a HUD PFS property. The client is informing you that they plan to use the appraisal MVO as a tool to assist them to determine the list price.

 

[Deleted member 134708]

@DWiley

You have any thoughts as your company is acting as an agent for a lot of these lenders. You may have some internal insight. Do you find what they ask for and what they want are always the same?

 

[Dublin ohio]

I would not consider a pfs the same as an REO. Unless there is some kind of required disclosure. Why would it not be marketed the same as a non pfs or REO. Do not think it would have the same if any of the stigma associated with an REO. Just appraise it at mv

 

[J Grant]

Why not have a friendly chat with your client about it? Usually a chief appraiser or regional manager is willing to speak to an appraiser and provide guidance.

 

[Deleted member 134708]

Why not have a friendly chat with your client about it? Usually a chief appraiser or regional manager is willing to speak to an appraiser and provide guidance.

I just did today funny enough.

The AMC said "our client would like to know what it will sell for as a foreclosed home"......their use is to directly take my MV and sell the home at that price.

So is the 1004 the most correct form as my question implies @J Grant ?

 

[Randolph Kinney]

The AMC said "our client would like to know what it will sell for as a foreclosed home"......their use is to directly take my MV and sell the home at that price.

So they want to know the market value using the hypothetical condition that subject is REO, which is contrary to what exists as of the date of inspection.

You can use the 1004 form.