Liquidation Value?

[Lawrence R.]

I was wondering what techniques other appraisers use to determine a liquidation value for a residential property?

Statistical analysis/adjustment to market value?

Comp selection that only included foreclosure resales?

Assessor data or courthouse step auctions?

All of the above? None?

If so, what would you generally lend the most weight to?

Also, let's assume that the market area is not "rife" with foreclosures, but there are enough out there to compete with other listings.

 

[hastalavista]

I was wondering what techniques other appraisers use to determine a liquidation value for a residential property?

Statistical analysis/adjustment to market value?

Comp selection that only included foreclosure resales?

Assessor data or courthouse step auctions?

All of the above? None?

All of the above but I'd also survey market participants and the results of that survey may provide an indication which of the above analyses I'd give most weight to.

Also, let's assume that the market area is not "rife" with foreclosures, but there are enough out there to compete with other listings.

I think the above is when a survey of market participants is very worthwhile.

:new_smile-l:

 

[Terrel L. Shields]

The best liquidation value is the disposal of a property by auction in an open bidding process where the conditions of the sale are disclosed, & the auction is well advertised. That is, the buyer knows that the owner has a clear title and no outstanding liens, something difficult to tell sometimes when the seller is a lender or a government agency. Gov sales are the least reliable.

 

[Walter Kirk]

Tough question, I wouldn't rely on forclosure sales since the sales prices might not include the real purchase price. If I were looking for a liquidation price I would look for comparables which sold within a few days of listing and then follow up with calls to the brokers or sellers to verify the sales conditions. The typical buyers in liquidation sales are investors, if possible they should be contacted to determine what discount from market price that they look for to develop an adjustment.

 

[OminousRun]

Liquidation value, by definition, is the value that the property will sell for at a reduced marketing time.

If the client was a value for a 1 day marketing time, that's your liquidation value.

If they want a 30 day liquidation value you need to figure out at what price the property will sell for based on a 30 day marketing time.

Pay attention to typical marketing and exposure times in your market to figure it out. Look at how long properties of similar condition took to sell. Hopefully you can find some comps with short marketing times that would give you a good indication of liquidation value.

You might want to look for homes that sold for above list price too, as that can be an indication of a value (the list price of the comp) that is BELOW liquidation value. If the comp sold in 2 days for above list price, the list price was most likely below the liquidation value.