Listing history indications

[JTip]

"they" say the value should be where the list price is.

I have a local market (city/area) where every listed property is 20%-40% below the actual sales price. This technique draws multiple offers in a few days using escalation clauses and generates a supported sales price. Not a new technique, I'm not a fan of it, but brokers and agents have sold the participants on it. Like listing a million dollar property for $1, it should still sell for a million.

So no, the value is NOT the list price.

 

[J Grant]

I have a local market (city/area) where every listed property is 20%-40% below the actual sales price. This technique draws multiple offers in a few days using escalation clauses and generates a supported sales price. Not a new technique, I'm not a fan of it, but brokers and agents have sold the participants on it. Like listing a million dollar property for $1, it should still sell for a million.

So no, the value is NOT the list price.

That is not the case in my area - typically the listings are put on about 10-20% higher than the market will bear, get reduced, and if reduced to a market-acceptable level, they get offers and go into contract. Every area can differ wrt how good an indicator list prices are for trends.

 

[Fernando]

No. If you are doing GSE work, your value must be based on and supported by closed sales. Whether you include listings in your appraisal report or not, you should be reviewing listings and analyxing them to help look at trends.

Secondly, it is wholly inappropriate for AMCs or Clients to be trying to tell the appraiser what the value should be (or a direction of value). You have to make your own decisions about how professional you want to be. I'd tell them, politely, to stick to making loan determinations and leave the appraising to appraisers.

AMC/Client asking why appraiser didn't address listing price for current active listings. Even Realtors know if property sits on market too long, asking price is too high.

 

[Fernando]

I have a local market (city/area) where every listed property is 20%-40% below the actual sales price. This technique draws multiple offers in a few days using escalation clauses and generates a supported sales price. Not a new technique, I'm not a fan of it, but brokers and agents have sold the participants on it. Like listing a million dollar property for $1, it should still sell for a million.

So no, the value is NOT the list price.

Last month there was a fixer asking $2.3 million for sale and wife asked me to look into it (I think I might have mentioned it).
I glad I didn't make an offer at list price because I would have wasted my time.
It sold for $3 million. My wife knows her values.
Now she's asking me to look at another fixer asking $1.6 million. Most of the townhome inside has been demolished inside and ready to be easily remodeled.

 

[sputnam]

AMC/Client asking why appraiser didn't address listing price for current active listings. Even Realtors know if property sits on market too long, asking price is too high.

So address that question. The answer needed is, as always, in the market data. That is the job you know.

 

[Tom4value]

The comments here are generally in line with my market activity and motivations as well. However, there is a flaw.

The OP said that this is an REO property. REOs have their own market characteristics. Buyers know two definite things and one probable.
1. Lenders are in the business of lending money, not selling houses.
2. Buyers love “sticking it” to lenders. The lender can list a house for $100 and a buyer will still offer $95. They can do this because of the probable; the house probably needs work, chances are a lot of work. That will remove a lot of their competing buyers.

The result is the sales price being higher than the asking price, with marketing days in the single digits for “normal” transactions is not found in REOs. Indeed, the few REOs I see in the market usually have longer DOM and sales prices equal to or lower than asking prices. So, in this aspect of real estate appraisal, lenders do know something.

 

[Terrel L. Shields]

now get ROV's claiming that listing data supports a lower value.

Do you ever see a trend of REOs selling below your estimate of MV? I mean do you go back and review those REOs after they sell? It always seemed to me that being an REO was a buyer's red flag. They were buying sort of sight unseen without hopes of proper disclosure. Sort of fear that there are issues undisclosed because the bank does not know what issues might be there.

In one case, I know a bank sold an REO with court approval only to have to refund the money when the owner discovered a flaw in the foreclosure process and he reclaimed his old home although the buyer had a clear (apparently) title and deed. And he ended up being out some bank fees, his time and a real headache. It involved a house on a large acreage lot.

Never did REO appraisals but wouldn't the client/lender want a value in which they can sell quickly at the right price.

I think I would be asking the bank what timeline they think they could sell or if they were going to hold the property. I've seen banks hold property for a couple of years because they could carry it on their books as an asset when everyone, but the regulators knew the property wasn't worth what they were booking it for on their own books. Other banks might want shed of that hot property asap. I'd be looking at the shortest possible marketing time properties I could find usually.

 

[Tim Hicks (Texas)]

REO appraisal's typically have a requested marketing time value (0-90 or 90-120 days, etc). You should make adjustments or considerations regarding their required marketing times.

 

[Fernando]

Do you ever see a trend of REOs selling below your estimate of MV? I mean do you go back and review those REOs after they sell? It always seemed to me that being an REO was a buyer's red flag. They were buying sort of sight unseen without hopes of proper disclosure. Sort of fear that there are issues undisclosed because the bank does not know what issues might be there.

In one case, I know a bank sold an REO with court approval only to have to refund the money when the owner discovered a flaw in the foreclosure process and he reclaimed his old home although the buyer had a clear (apparently) title and deed. And he ended up being out some bank fees, his time and a real headache. It involved a house on a large acreage lot.

I think I would be asking the bank what timeline they think they could sell or if they were going to hold the property. I've seen banks hold property for a couple of years because they could carry it on their books as an asset when everyone, but the regulators knew the property wasn't worth what they were booking it for on their own books. Other banks might want shed of that hot property asap. I'd be looking at the shortest possible marketing time properties I could find usually.

Sometimes lenders may want low appraisal for REO.
When I was at the bank, some deals not arms length. Some get "special" deals selling to "connected" people in the banks. Wished I was the "connected" people then.

 

[Terrel L. Shields]

Sometimes lenders may want low appraisal for REO.
When I was at the bank, some deals not arms length. Some get "special" deals selling to "connected" people in the banks. Wished I was the "connected" people then.

yes, there was a lot of bargains sold to Walmart executives from a mortgage company related to the family or local businessmen. The crap houses were sold at auction.