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Help with REO appraisal questions

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Andrew Urbanek

Thread Starter
Sophomore Member
Joined
Apr 30, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I received my first REO order request (Im sure the first of many with the way the market is heading down here) and before I talk with some other state certs that have more expericence with REOs I thought I would ask a few questions here.

OK, so I have a REO appraisal request for a single family home and my client stipulates the following two points:

* You MUST provide a 90 day value for the subject property.
However, if the marketing time for the subject's market is less than 90 days,
then your final value will reflect a less than 90 day value.

* You must provide at least two sales which sold 90 days or less
after list date. The 90 days-on-market can be total days on market or
can be days-on-market at the last reduced listing price. If using
days-on-market at the last listing price or if you are using less than 2
comps that have days-on-market 90 days or less, then a detailed explanation
is required.

Basically, are they looking for a 90 day liquidation value instead of market value which may be based on 3-12 months of market exposure? The order request also had these points:

* 3 Closed Comparable Sales. All comparables must be within 1 mile
from subject and sold within the last 6 months. NOTE: If comparable
sales exceed proximity/sale criteria, detailed explanation is required.

* 3 Comparable Listings. If not reported on the "Supplemental Real
Estate Owned Appraisal Addendum" form, the listings must be gridded,
and must be adjusted in the same manner as the comparable sales.

* Cash, REO or distressed sales are acceptable for this 90 day
valuation product.

Thanks for any feedback!
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Per your post, they want two values:

A. Current as-is market value based on your estimate of the current exposure time.

B. A value with the assumption that the exposure time is less than 90-days.

If "A" is less than 90 days, the "A" = "B".
 

bart nathan

Member
Joined
Jun 9, 2005
Professional Status
Certified Residential Appraiser
State
California
what company is this? LSI
 

Andrew Urbanek

Thread Starter
Sophomore Member
Joined
Apr 30, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Thanks for the reply Denis! It was very helpful indeed, but now I have another question based on your answer. If I have my three sales comps supporting an A value (based on a typical market exposure time of 3-9 months) and three active/pending listings supporting A or possibly B....what do I use to fully support the B value?

And to Bart, its not LSI...I have never worked for LSI as they always have too many appraisers in my market area on their fee panel. I got this order through a lessor known AMC that works with an insurance company.

Per your post, they want two values:

A. Current as-is market value based on your estimate of the current exposure time.

B. A value with the assumption that the exposure time is less than 90-days.

If "A" is less than 90 days, the "A" = "B".
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Thanks for the reply Denis! It was very helpful indeed, but now I have another question based on your answer. If I have my three sales comps supporting an A value (based on a typical market exposure time of 3-9 months) and three active/pending listings supporting A or possibly B....what do I use to fully support the B value?

Right. So, we know what the typical marketing time is, and if it is more than the 90-day period, how do we credibly estimate the less than 90-day value (I think that is the question)?

I'll look at those sales that have sold in the less-than-90 day period. Not all quick sales are sold quickly due to reduced prices; some are just lucky. I try to filter through the lucky ones with the ones that appear to be discounted.
I'll also call and talk the market participants- which is the agents selling houses in my area (I'd say this is a must when trying to analyze an REO valuation; and a good idea to do for all assignments).
Asking an agent who has a current listing what she or he thinks is the typical marketing time for the neighborhood should be a no-brainer for a competent real estate agent. Once I ask this, I then ask what they think it would take to sell the same property in 60-90 days. The answer can vary, but it usually dances around 5% (unless the property is listed high).

If, on average, my quick selling properties are priced 3-5% below the "median" and the agents confirm that dynamic, I consider that reliable and credible.

If your data is conflicting, then you get to make a judgment call. But, that's why they pay us the big bucks for these appraisals, right? :laugh:

Good luck!
 

Andrew Urbanek

Thread Starter
Sophomore Member
Joined
Apr 30, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Lol, yes you are right on about those big bucks Denis...thanks again for your insight!
 

Sophia Berry

Freshman Member
Joined
Feb 21, 2005
Professional Status
Licensed Appraiser
State
Georgia
Hello:

I received my first order for a REO appraisal and I've never done one. Can anyone send me an completed page of the Supplemnetal REO Addendum? I just want to see exactly what they are looking for, and the language to use.

Thanks.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
....

OK, so I have a REO appraisal request for a single family home and my client stipulates the following two points:

* You MUST provide a 90 day value for the subject property.
However, if the marketing time for the subject's market is less than 90 days,
then your final value will reflect a less than 90 day value...


Thanks for any feedback!

Remember...you are obligated to include the definition of MV and "one size does not fit all".
 
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