Liquidation Value Residential Appraisal

[Caterina Platt]

Jackson,

With REOs, you have other concerns that aren't necessarily just market time.

Lender liquidations are sold on some pretty nasty contract forms that were written by the Seller/Lender's lawyers and are written to cover them and certainly not in any interest for the Buyer.

Second, they are 'As Is', what-you-see-is-what-you-get situations. If I'm the buyer, I'm paying less for that just in case there are hidden defects. I can get an inspection(s) for my own knowledge and benefit, but I don't have any contingencies and 'outs' from the contract if I don't like what I find.

Is the subject in less than average condition? Other than marketing time, what would make these comparable and applicable?

What is the typical marketing time in this neighborhood?

What is the balance of supply and demand at this time?

 

[JacksonCarter]

Jackson,

With REOs, you have other concerns that aren't necessarily just market time.

Lender liquidations are sold on some pretty nasty contract forms that were written by the Seller/Lender's lawyers and are written to cover them and certainly not in any interest for the Buyer.

Second, they are 'As Is', what-you-see-is-what-you-get situations. If I'm the buyer, I'm paying less for that just in case there are hidden defects. I can get an inspection(s) for my own knowledge and benefit, but I don't have any contingencies and 'outs' from the contract if I don't like what I find.

Is the subject in less than average condition? Other than marketing time, what would make these comparable and applicable?

What is the typical marketing time in this neighborhood?

What is the balance of supply and demand at this time?

Activity is good, 8 comp listings, 30 comp sales over past year, search radius is 0.6 miles. List DOM is 51 and for sales it is 103 DOM. About 10 to 15% are REOs and shorts. Subject is in good shape, just some typical wear and tear.

 

[Ray Miller]

Liquadition Value -- 30 day, 60 day, 90 day, 120 day you haven't said.

What is your current inventory?

Days on Market?

Sales taken off the market?

What is the sub market doing for this type of subject? I would think you posted general market conditions.

Why would you use REO property if it's not the current market?

Your doing forcasting here, I would think. Similar to an ERC appraisal.

You said this was a bankruptcy appraisal, what is the Trustee looking for in time frame for quick sale? They are the ones that pull the strings most of the time that I have seen.

 

[Lee Lansford]

...

Your doing forcasting here, I would think. Similar to an ERC appraisal.

...QUOTE]




Ray, unless I missed something along the way, I don't see where forecasting (ala ERC appraisal) comes into play.

Lee

 

[JacksonCarter]

Liquadition Value -- 30 day, 60 day, 90 day, 120 day you haven't said.

What is your current inventory?

Days on Market?

Sales taken off the market?

What is the sub market doing for this type of subject? I would think you posted general market conditions.

Why would you use REO property if it's not the current market?

Your doing forcasting here, I would think. Similar to an ERC appraisal.

You said this was a bankruptcy appraisal, what is the Trustee looking for in time frame for quick sale? They are the ones that pull the strings most of the time that I have seen.

Okay, lets say it's a 60 day market valuation the clients want. I have 8 comp listings and 6 sales over the past 60 days. The listings and sales include reos and short sales. What is the method for determining this kind of liquidation value? Is there a definitive method? What process did you follow when you did your ERC appraisal?

 

[CANative]

I'll bet this is a miscommunication. They're using the term "liquidation" value in a different way than an appraiser might use it. They're probably referring to the process of liquidating the assets for purposes of distribution rather than figuring out what price the property might sell for in the shortest amount of time.

I think some more communication is required. But that's just my opinion without really knowing anything specific. Be careful. Sleep on it for a day or two.

 

[AlwaysLearning]

I got my first request for a liquidation value appraisal. So I thought I'd bounce it off some folks who have actually done some. Its for a client in a bankruptsy and its on a typical residence/neighborhood. I'm thinking a 30 day market period. The clients are represented by attorneys and neither seems to know much more than that they need a liquidation value. I usually use the GP form for divorces. Is there some other form? What about comps, are we talking about using REO and short sales and anything that's sold under 30 days. Thanks

If a liquidation value is being requested, have the client approve the 30 day marketing time. In a liquidation value, the client (not the appraiser) specifies the future marketing period. This future marketing time is “client-imposed” and reflects the client’s needs and therefore it is not based on some market data.

So if your client does need a liquidation value then Rey is correct. This assignment is similar to an ERC appraisal and forecasting (or discount) is needed.

 

[Mr Rex]

Okay, lets say it's a 60 day market valuation the clients want. I have 8 comp listings and 6 sales over the past 60 days. The listings and sales include reos and short sales. What is the method for determining this kind of liquidation value? Is there a definitive method? What process did you follow when you did your ERC appraisal?

I don't think you quite have a clear idea of what a 60 day liquaidation value is per the above statement.

 

[JacksonCarter]

If a liquidation value is being requested, have the client approve the 30 day marketing time. In a liquidation value, the client (not the appraiser) specifies the future marketing period. This future marketing time is “client-imposed” and reflects the client’s needs and therefore it is not based on some market data.

So if your client does need a liquidation value then Rey is correct. This assignment is similar to an ERC appraisal and forecasting (or discount) is needed.

So what is the method/process for doing a liquidation/ERC value? In a typical market valuation, I pick my comps which are similar in most respects to the subject situation and draw a direct conclusion to a value. Do I just do the same with a liquidation. I pick comps that are under stress of a quick sale and draw the value from that?

 

[CANative]

Oops. I thought this was for a divorce. I read the OP too fast.

I wonder if they're trying to keep the note holder from appealing the automatic stay?