Just for the heck of it

[Mztk1]

Jim,

In my range I would discussess the weighting process for each and why I gave a range of of value because the weighting process suggested I should. Does that make sence??

Maybe it will once I've had a cup of coffee or two.

 

[crdave]

I think that it is very important to analyze the active and pending listings in these type of neighborhoods. In my area, many neighborhoods have been overrun with these type of listings and are the only ones contracting at discounted prices. The buyers are buying at the bottom leaving the normal listings sitting and being reduced to near the foreclosures/short sales.

 

[Conservative in Virginia]

Mike, I am so glad you posted this question as I am doing one Right now. It is a purchase of a bank owned property by an investor. It is in a nice neighborhood that traditionally supports the range of 225 - 350 value (depending on size and proximity to the small lake in back of neighborhood. (mine is not lake front) Anyway, the home was listed last year for a goodly time around 250. It did NOT sell and went to auction. Investor bid 168 and WON! (The home is in average condition - cosmetics, dirty carpet, needs paint but not a despicable dump at all)

First problem.. last sale in neighborhood was October.. Nothing since so I do not feel I have any real evidence of current neighborhood market. I have gridded the two last sales from the neighborhood with negative time adjustments and indicated value still well above the 200K range................(both of these da%^M comps are smaller than the subject but in typical clean sell condition)
So I went looking specifically for Bank owned sales. I have gridded two which are relatively nearby and of course these babies are smaller than the subject too but more closely support the bid price here.

It is almost like I am answering the question, How much would a typical investor bid for the property if your borrower defaults? Well, here is an example. Of course he is thinking he will clean the carpet, paint it pretty and flip it.

I think I like the suggestion to make an addendum clearly pointing out the two different ranges of value, however, my final estimation regardless, in this case is gonna sink down close to what this guy was willing to bid for it. Obviously no one else thot it was worth a penny more!

Thanks again Mike

 

[Mike Boyd]

I would choose from among bank owned and non bank owned by which are most similar to the subject in features, amenity, location etc, re the principle of subsitution. Yes, we have to give one estimate of value how can you give two estimates and let an underwriter choose? flip a coin time? We make it much more complicated than it has to be. Principle of subsitution is what drives the buyer and what drives the selection of comps. If some of those comps are bank sales and some were sold by owners, use all of them, and see where the value comes out. I'd also include some listings, pendings if possible, for a check where most recent market trend is.

I agree with Jo Anne. Remember, we must appraise to THE MOST PROBABLE selling price. While there may be incidences of buyer resistance to foreclosed homes, I feel there would be equal resistance to buying a more expensive home in a neighborhood of foreclosures.

A lot would depend on the number of foreclosures in that neighborhood and if there is really any reason to pay $25,000 more for a non foreclosure. Condition,? implied warranties? Non disclosure?

 

[Crunch Hardtack]

No problem Conservative. Stating the obvious, appraising is really getting to be a bit*h. In NW Ohio we have a net loss of jobs and population. I have seen houses on the market for almost two years in some areas. Unless an investor is willing to come into our area and snap up properties on speculation, there is a good possibility that some homes will never sell. How the heck to you produce credible results in a market like this? (You do your best to analyze and present the data, but it can be pretty subjective)

You indirectly make another good point in that I think the purpose of this forum is to help each other out. While it would be nice if we all had good mentors, that is not always the case. (Mine turned out to be a second generation Skippy so I've had to take a lot of classes and do a good bit of self study in an effort to produce good quality work) If I see someone posting a question that I have an answer to, my time is not so valuable that I can't take a minute or two to respond.

As this thread illustrates, opinions can vary but the main thing is that we are getting opinions that will help us make decisions that will continue to produce good appraisals.

 

[Richard Carlsen]

In that thread Richard Carlsen has a point, but if I am a typical buyer and I can pay 100k for a bank sale dwelling or 150k for a conventional sale, I'm going to buy the cheaper dwelling, so, if there are a significant number of bank sale, etc sales in the 'hood you have to consider that they may be the market.

One has to remember that a buyer does not buy a property IAW the definition of Market Value. A buyer buys a property based on his own motivation, needs, wants and means. The buying decision of the buyer has nothing to do with the definition of Market Value. The buying decision is simply part of the market dynamics. The definition of Market Value defines which particular part of the the market dynamics we apply to the appraisal analysis.

While the results of the buying decision can in fact be reflected in the opinion of Market Value, the definition of Market Value cannot be used to define the buying decision.