Liquidation/Quick Sale Value

[Grace]

Just received a request for As-Is Value, As-Repaired Value (Normal Market Time) and a 30 day Liquidation "Quick Sale" value. The lender is saying they do not need the REO addendum. Where would I document the 30 day quick sale value, on an addendum? Or would I take three comps that sold in 30 days (if I can find them) and grid them as comps seven, eight and nine?

 

[Webbed Feet]

Just received a request for As-Is Value, As-Repaired Value (Normal Market Time) and a 30 day Liquidation "Quick Sale" value. The lender is saying they do not need the REO addendum. Where would I document the 30 day quick sale value, on an addendum? Or would I take three comps that sold in 30 days (if I can find them) and grid them as comps seven, eight and nine?

Grace,

I immediately detect total confusion! We need to work this backwards.

What in the ding dong makes you think that three sales that happened to sell in 30 days are sale comps with contract prices that represent a "30 Day Liquidation" or "Quick Sale" Value?"

Just the fact you asked where to document a definition of value in your report has me blinking while trying to consider a tactful response.

Look Grace, if you can't do better than this taking on this assignment, you just ain't qualified for it. The absolutely first thing you have to do is require this client to either provide you a definition of what they think "Ouick Sale Value" is, or you have to obtain one and present to them for agreement that is the definition that is going to be used for that part of the assignment. And if YOU can't understand that definition, cannot understand how to apply it, and don't even comprehend how to place it in your own darn reports...... or how to report an analyses without a "form" to use....

............... withdraw from this assignment then Grace.

 

[Grace]

30 Day Quick Sale Value

I appreciate your quick reply Webbed Feet. I realize that I am being asked to give two values, based on two different definitions. A definition of Liquidation/Quick Sale value will be included in the report. As far as determining quick sale value, unless I'm wrong, I would attempt to find and review similar REO homes that have sold within 30 days and see what those price ranges are as opposed to those that sold under normal marketing time. What I should come up with is a range in the indicated sales price which will show that quick sales were priced xx% less than those marketed under normal marketing time. Am I wrong? Where are others documenting this on their reports?

 

[Randolph Kinney]

liquidation value

The most probable price that a specified interest in real property is likely to bring under all of the following conditions:
1. Consummation of a sale will occur within a severely limited future marketing period specified by the client.
2. The actual market conditions currently prevailing are those to which the appraised property interest is subject.
3. The buyer is acting prudently and knowledgeably.
4. The seller is under extreme compulsion to sell.
5. The buyer is typically motivated.
6. The buyer is acting in what he or she considers his or her best interest.
7. A limited marketing effort and time will be allowed for the completion of a sale.
8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto.
9. The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

This definition can be modified to provide for valuation with specified financing terms. See also disposition value; distress sale; forced price; market value.

 

[Lobo Fan]

Dang Web, all she was doing was asking for advice, not a competency lecture. Are you going to answer her question or do you even have an answer? Let's cut some slack for people. Not everyone was born perfect.

 

[Lee Lansford]

Just received a request for As-Is Value, As-Repaired Value (Normal Market Time) and a 30 day Liquidation "Quick Sale" value. The lender is saying they do not need the REO addendum. Where would I document the 30 day quick sale value, on an addendum? Or would I take three comps that sold in 30 days (if I can find them) and grid them as comps seven, eight and nine?

A word of caution: In this 2nd ("quick sale") opinion of value, be certain to provide a definition of the value!

 

[Webbed Feet]

I appreciate your quick reply Webbed Feet. I realize that I am being asked to give two values, based on two different definitions. A definition of Liquidation/Quick Sale value will be included in the report. As far as determining quick sale value, unless I'm wrong, I would attempt to find and review similar REO homes that have sold within 30 days and see what those price ranges are as opposed to those that sold under normal marketing time. What I should come up with is a range in the indicated sales price which will show that quick sales were priced xx% less than those marketed under normal marketing time. Am I wrong? Where are others documenting this on their reports?

Grace,

I'm going to ignore Lobo and bonk you again. Your thinking cap just either is not on today or you need to get somebody local to walk you through this assignment by handing it to them and you being a trainee again..

HOW MANY (opinions of) VALUE??? You need to recount how many you've been asked for and get that right before jumping to concentrating on only one of them. Grace, how many opinions of value is this request asking for? Two, three, four, or more? For a hint, I suspect that you have not cleared up with this client how many yet.

Then you've just altered "comps" to now specifically be "REO comps" over that determination of quick sale value. Again, for a hint, which quick sale value? ... Plus, I note you are already mentally selecting comps when you don't yet seem to have a client agreed upon definition of "Ouick Sale" value... How do we pick comps for an undefined value we don't comprehend? ... Answer: We don't.

More, out of a group of 100% of the available REO sales, how is it that the only the ones that happened to sell in under 30 days are not the ones that meet the definition of "Market Value" for those sales, yet the ones that happened to sell in plus 30 days do? Type me up an addendum explaining to me how all the ones that sold in under 30 days meet a defintion of value, that you don't have or understand yet, and represent "Quick Sale" values for adjustment against "Market Value" sales. I'd love to hear the logic that proves that these faster sales simply were not due to being in better locations, having better floor plans, in superior condition, or not marketed at prices over their individual market value in the first place.

Present your addendum on that...

 

[Grace]

30 Day Quick Sale Value

Well now I am confused. Does anyone have or know where I can obtain information on the steps they go through to determine Liquidation/Quick Sale Value. I realize my market is unique, and I gather the data from it, I'm talking about methodology. Are the procedures for determining a Liquidation/Quick Sale Value actually written down?

 

[Webbed Feet]

liquidation value

The most probable price that a specified interest in real property is likely to bring under all of the following conditions:
1. Consummation of a sale will occur within a severely limited future marketing period specified by the client.
2. The actual market conditions currently prevailing are those to which the appraised property interest is subject.
3. The buyer is acting prudently and knowledgeably.
4. The seller is under extreme compulsion to sell.
5. The buyer is typically motivated.
6. The buyer is acting in what he or she considers his or her best interest.
7. A limited marketing effort and time will be allowed for the completion of a sale.
8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto.
9. The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

This definition can be modified to provide for valuation with specified financing terms. See also disposition value; distress sale; forced price; market value.

Mr. Kinney,

As we are intellectually going to help others here, what is wrong, by being unidentified, in the defintion you've provided?

Hint for those that don't know: It's in the first sentence.....

 

[Webbed Feet]

Well now I am confused. Does anyone have or know where I can obtain information on the steps they go through to determine Liquidation/Quick Sale Value. I realize my market is unique, and I gather the data from it, I'm talking about methodology. Are the procedures for determining a Liquidation/Quick Sale Value actually written down?

Grace,

I don't mean to be confusing you. But you've moved from first right off asking about not knowing how to comply with Standard Two, then about complying with Standard One in the same first post. Now, while apparently yet ignoring the SOW Rule because you don't yet know what definition of value is needed to comply with a 30 day limitation, or even how many opinions of value are being asked for, you are back to a Standard One question regarding developing an opinion for a value definition you don't yet have.

One of the interesting things here, while you ponder going back and tackling your engagement phase as you should be first, is your client's staff may have an assumption that to produce a Market Value contract price in 30 days or less is not possible in your market. You seem to immediately be making the very same assumption. Why? .. If it were to turn out that assumption is untrue, how would you find that out?

What if Mr. Kinney's definition was asked for, and in step seven the issue was not time, but rather the client wants to define complete lack of marketing? If the client defines all the typical marketing that your market would currently expect, what if 30 days or under was just as possible for getting a "Market Value" price in that case as any other price? What "methodogy" would be needed for the "value" opinions in that case? What would be the adjustment or discount?