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Need some help quickly

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Charles Decker

Thread Starter
Sophomore Member
Joined
Nov 16, 2006
Professional Status
Certified Residential Appraiser
State
Arizona
I am doing an REO FHA purchase in the town of Maricopa which is a declining--oversupply market. The majority of properties are REO's and there is a huge discrepancy of pricing in the subject neighborhood ranging from 139K-275K for similar properties. I have a statement in the addendum and I'm wondering if it is OK or am I injecting my own (maybe biased) opinion. Below is my statement:

The subject neighborhood appears to experiencing a declining market with many foreclosures and a wide disparity of selling prices and current active listing prices. This is evidenced by comparables 1 and 3 in this report. While both are very similar with regards to GLA and comparable 3 is superior in condition, the sales price difference is over $50,000 and closed within two weeks of each other. The reason for the wide range of listing prices is unknown however banks/lenders which own these properties may be relying on BPO's (Broker Price Opinion) to determine listing prices. BPO's are typically performed by Real Estate agents that usually are not trained in a comprehensive fashion to evaluate properties and as such, some properties may be listed for below or above market value.

Please critique this as the report is going out in two hours. The two comparables referenced above closed within the past 30 days.
 

Zmcraney

Junior Member
Joined
Oct 17, 2007
Professional Status
Licensed Appraiser
State
Mississippi
Charles,

The only thing that I see that could possibly give you future heart burn is the last sentence. In all actuallity you are probably well on point by stating this fact, but it will probably result in a time wasting call back from an underwriter to take the comment out of the report. Also, more decription of the individual comps probably wouldn't be a bad idea, the way it's wrote now is not real easy to follow.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
I am doing an REO FHA purchase in the town of Maricopa which is a declining--oversupply market. The majority of properties are REO's and there is a huge discrepancy of pricing in the subject neighborhood ranging from 139K-275K for similar properties. I have a statement in the addendum and I'm wondering if it is OK or am I injecting my own (maybe biased) opinion. Below is my statement:

The subject neighborhood appears to experiencing a declining market with many foreclosures and a wide disparity of selling prices and current active listing prices. This is evidenced by comparables 1 and 3 in this report. While both are very similar with regards to GLA and comparable 3 is superior in condition, the sales price difference is over $50,000 and closed within two weeks of each other. The reason for the wide range of listing prices is unknown however banks/lenders which own these properties may be relying on BPO's (Broker Price Opinion) to determine listing prices. BPO's are typically performed by Real Estate agents that usually are not trained in a comprehensive fashion to evaluate properties and as such, some properties may be listed for below or above market value.

Please critique this as the report is going out in two hours. The two comparables referenced above closed within the past 30 days.

Charles,

You might give them the actual stats as well.

Example:

The are X number of active listings at an average of $xxxxxx There are a x number of closed sales at an average of $xxxxx = 80% of list to sales price ratio. There are x number of pending sales at an average sales price of $xxxx. There are an average of x number of expired listings at an average of $xxxx. Average days on market for closed sales = X days.
 

Charles Decker

Thread Starter
Sophomore Member
Joined
Nov 16, 2006
Professional Status
Certified Residential Appraiser
State
Arizona
You're probably right Z, I struck out the end of that statement and added a couple of commas to hopefully make it easier to read..

Don, Thanks for that. I will provide a more detailed description using the model you provided. OK now the report is going out in 2 1/2 hours LOL.

The subject neighborhood appears to experiencing a declining market with many foreclosures and a wide disparity of selling prices and current active listing prices. This is evidenced by comparables 1 and 3 in this report. While both are very similar with regards to GLA and comparable 3 is superior in condition, the sales price difference is over $50,000 and closed within two weeks of each other. The reason for the wide range of listing prices is unknown however banks/lenders, which owns these properties, may be relying on BPO's (Broker Price Opinion) to determine listing prices. BPO's are typically performed by Real Estate agents.
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
"The subject neighborhood appears to experiencing a declining market with...."
- - - - - - -
Appears to be experiencing a..... Either it IS a declining market, or it is stable, so say which one it is ! Offer the brief summation numbers from your analysis of the reviewed data which confirms, in your professional view, the trend that exists for that sequence of time intervals studied up to today. If there is any separation between "neighborhood" and "market area" then be sure to clarify that, or else let the reader know those are the same for your analysis. "Appears to be"....leaves a loophole for "but might not be, however".

I'm not sure that you should attempt to inject the BPO pricing comments into your statement about whatever an offered for-sale property shows as an active listing. If it were not priced by a BPO then it would be a CMA. There really is not much of a difference there. Somehow, they have to "come up with" a price ! Most new listings are predominantly offered at an initial price which takes into account that needed settlement amount to satisfy the outstanding mortgages, pay the realty agents their commissions.....and then, maybe, leave the seller with enough equity to put gasoline in their cars. Listings are sprinkled with a lot of......."Hope".

The greatest contributor to many of these desparate situations is the overwhelming LACK OF EQUITY that exists for those feeling "the squeeze" ! There is no cushion to lean on.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
I still would strike the BPO comments. How many sales, how many were foreclosures? What is the average price differential between foreclosures and non-foreclosures? What is happening price-wise to typical arms-length transactions?

If you have a multi-tiered market, you need to be careful in comp selection so that you're not skewing your value estimate.
 

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
If you have a multi-tiered market, you need to be careful in comp selection so that you're not skewing your value estimate.


Good Call Roger. Many times the market/neighborhood is multi-tiered. REO RE Agents dont make a lot of effort to sell REO's for what they are actually worth. If they did try, the hip pocket investors would go away and find a new agent. :)
 

Couch Potato

Elite Member
Joined
Mar 15, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
It is good enough to say you do not know why the wide price range exists, other than mentioning a large number of REO properties. Don't speculate about BPOs and their effect. If you have real data, give that data. Speculation in one area raises the idea that other parts of the report may be based on speculation, and thereby reduces the credibility of the whole appraisal.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
I would strike the BPO comments because you simply do not know if they are true. What you know to be truth is that values are declining, the market appears to be saturated with REOs, and that values have suffered as a result.
I caution you strongly from saying what others are doing when you do not know that to be the case. It could be in fact misleading if it is found to be not true.
Report what you know and speculate about as little as possible.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
...The reason for the wide range of listing prices is unknown however banks/lenders which own these properties may be relying on BPO's (Broker Price Opinion) to determine listing prices. BPO's are typically performed by Real Estate agents that usually are not trained in a comprehensive fashion to evaluate properties and as such, some properties may be listed for below or above market value.

Please critique this as the report is going out in two hours. The two comparables referenced above closed within the past 30 days.

No, no, no, no.

Reconcile the sales comparisons and form an opinion of MV.

The wide range of listing prices (re: REOs and/or Short-Sales) may be due to how many dollars the lender has into the property.

Frankly...your statement above could apply as well to WAY TOO MANY licensed appraisers.
 
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