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Is It A Flip?

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robert hoagland

Freshman Member
Joined
Jan 27, 2003
Professional Status
Certified Residential Appraiser
State
Connecticut
Who do I notify about a possible flip? I have a typical assignment for a purchase with a selling price of $286,000. While digging for research materials I came across a listing for this property starting 11/15/2002 at $269,900. Moments later a sale sheet came up for 2/13/2003 at $265,000. Then the current listing starting 6/13/2003 for $285,000. Hmm! I have calls out to the two Trump wanabee listing and selling agents. My appointment is for tomorrow AM. Do I continue on?
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Nobody until and unless you got ALL the goods to prove it!

I vote you continue and let us know the "rest of the story"


You will get either an education as to the making of a rightious deal, OR an entertaining but utterly false tale fo the machinations behind the deal!

Either way you can do your job a best you can, and be an investigative reporter, or sleuth, or whatever hat you want to wear....

You were planning on wearing your deerstalker right?...

or skip it.

you chose and can back out at any point B)
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
That difference barely covers the commission. Is the listing Agent now the seller?

I would report it all and simply use the best comps available and bring it in wherever it belongs. Could be the original seller needed a very quick sale and it was priced low to do that??? Someone that could cash them out quickly did the deal and put it back on the market? Just report what you find and do your job. Whatever the final value is, the current seller will have to live with.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Typically in a flip you will find two sales recorded nearly simultaneously with the second being substantially higher than the first.

I was involved in appraising a bunch of properties that were the result of flips for Fannie Mae. What the crooked parties did was offer to purchase the property on a contract for say $100,000. They would tie up the property and offer it for sale to out of state investors for $160,000. A crooked appraiser was involved and created appraisals at $175,000. The investors took the bait and bought the properties (about 50 townhomes).

The real estate agent did simultaneous closings with two different title companies and picked up nearly $70,000 per property. Everything was fine until the investors found out they couldn't rent the townhomes for enough to cover the mortgage payments and the properties went into foreclosure.

Case is still pending. Real Estate brokers and appraiser lost licenses...both are facing jail time. If they had been smart they would have taken the money and fled the country...but no, they tried to do it again. Greed is really a killer.
 

robert hoagland

Freshman Member
Joined
Jan 27, 2003
Professional Status
Certified Residential Appraiser
State
Connecticut
Thanks for the input-Did the job today and apparently all is on the up and up. Realtor had 4 offers the first day of listing at the new, higher price. Having trouble finding comps though, it will be the highest valued raised ranch in the subdivision! As a matter of fact, the recent sale had already made it the highest valued raised ranch in the subdivision.
What's the previous appraisers phone number? Maybe he/she can find something for me.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Robert,

One of the oldest ploys by agents is to tell you about all the offers they had right away. Don't believe then until you see them! Ask for copies of those offers!!!!!!

Appraise it as if you didn't have any of that information. Only after that take the rest of this mess into consideration.

Be very careful and just don't believe anything!
 

Francois K. Gregoire

Senior Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Originally posted by Pamela Crowley (Florida)@Jul 17 2003, 05:43 PM
Robert,

One of the oldest ploys by agents is to tell you about all the offers they had right away. Don't believe then until you see them! Ask for copies of those offers!!!!!!

Appraise it as if you didn't have any of that information. Only after that take the rest of this mess into consideration.

Be very careful and just don't believe anything!
Pam,

Slight disagreement with the choice of words used. How about using the word "analyze" instead?

As in Standards Rule 1-4 (page 18, 2003 USPAP)

In developing a real property appraisal, an appraiser must collect, verify, and analyze all information applicable to the appraisal problem, given the scope of work identified in accordance with Standards Rule 1-2(f)

Subsequent and multiple offers on the subject property may be an indication of the relationship of supply and demand and could have an influence on the opinion of value. All of this, of course, varies with your market. Here on the west coast of Florida, multiple offers and short marketing times are quite common. Short periods of ownership often result in increases in value which may, on their face, appear to be unreasonable. Collection and verification of all the information applicable often supports opinions of value much different than gut feelings.

What do you think?

Frank
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
I think she is right in that many agents tend to over state how many offers have been received on a property in an attempt to influence the appraiser. Up until about a year ago it was common to get multiple offers but that market has subsided.

I never ask to see other offers...that is also confidential information (from a REALTOR® stand point). One area I feel appraisers should check is the listing history of the subject property. Do it by the address rather than the listing number because it may have been listed multiple times by different companies. Also check to see if it was listed at, say, $100,000 and then suddenly changed to $103,000. This is a good indication the agent is trying to make you think it sold for the list price rather than at some amount more to cover the seller paying the buyers closing costs.

We like to do Comparative Market Analysis research on a one square mile grid around the subject property for typical metro properties. Look at Active, Pending, and Solds. Observe the days on the market for each category. Next change the sold period to the previous six (6) month period and see if there is a change or trend.

Good data exist, at least on our MLS. It is our job to learn to use and interpret it. So often appraisers, in a rush to get the job done, just do a PFA (plucked from air) for information such as neighborhood price ranges and days on market. I also have another term for PFA but won't use it here.
 
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