Pending Sales for REO Addendum

[TJSum]

Use the pending as a fourth comp. The REO addendum asks for listings..

I have found what Doug has stated to be correct. If you are unsure, just affirm it with your client when accepting the assignment. Think about it, the client has a property they are going to, or have already listed for sale. They want to know the type of listings they will be in competition with. The pendings, if they go to settlement will not be their competition. The REO addedum is for listings and you can place your pendings on the sales grid as extra comps.

 

[Riick]

I sold real estate for a number or years.
Just because it's "pending" doesn't mean it will ever get to the closing table; plenty of pendings never settle.
It's a listing with a contract, but the price in the MLS is still just an ASKING PRICE.
If they're good indicators, I say use them.

 

[EVAUSA]

Use the pending as a fourth comp. The REO addendum asks for listings..

I have to respectfully disagree. I use Pending's on the REO Addenda ALL THE TIME call them Pending Sales. If I do get questioned, I'll change the description to "Listing in Escrow" or something like that, hopefully that will help them understand. The only complication I've run into is if I pull comps before inspection, I've actually had them close escrow BEFORE THE EFFECTIVE DATE and I had to get a new listing for the REO Addenda. It's happened twice, one more reason some appraiser wait to pull comps until after the inspection...but that's another topic.

 

[SnoValues]

FWIW: I just use active listings on the REO Addendum since they are the actual competition on the effective date of the report. Pending sales and expired listings can provide useful information, however, they are no longer competing once they are not available to buyers. Some lenders may not care about the grid on the REO Addendum and they may rely on the BPO/listing agent for the current listing competition for the subject.

 

[Wendy]

I understand the points about the un-contracted listings being more relevant competition vs. the contracted listings (aka pendings).

I still argue that the pendings are more valuable and should be included - add another page for them if you need to. My market is a poster child for the boom/bust and REOs are all the rage. Problem is that many are way overpriced and are just sitting and further clogging up the market. Part of the reason is that these lenders are getting appraisals and BPOs that show competing listings with stupid high prices.

There is actually very little inventory in my market with realistic prices - those properties sell in a very reasonable 3-6 months. The rest just gets recycled to look new and continue to muck everything up. errrr!

Pendings (with good contract information) are very important. A lack of pendings is even more important.

 

[The Bob]

The scope of work for an REO is to analyze competetive listings. They MAY be pertinient, or they could be pie in the sky. In my market listings are usually well above recent closed sales, so I don't given them much weight. From what I've read here, that is not always the case. In other parts of the country the listings could be very good indicators of value, or support for current trends.

 

[SnoValues]

I understand the points about the un-contracted listings being more relevant competition vs. the contracted listings (aka pendings).

I still argue that the pendings are more valuable and should be included - add another page for them if you need to. My market is a poster child for the boom/bust and REOs are all the rage. Problem is that many are way overpriced and are just sitting and further clogging up the market. Part of the reason is that these lenders are getting appraisals and BPOs that show competing listings with stupid high prices.

There is actually very little inventory in my market with realistic prices - those properties sell in a very reasonable 3-6 months. The rest just gets recycled to look new and continue to muck everything up. errrr!

Pendings (with good contract information) are very important. A lack of pendings is even more important.

When I find the best competing listings are overpriced, which is common, I still list them on the REO grid with their combined marketing time (recycled listings should have a lengthy CMT). I also make a comment that based on sales and pending sales that one or more of the competing listings appear to be listed above their market value and that partial or no weight has been given to them in reaching my final estimate of value. It is not necessary that the listings are consistent with the sales or pending sales. However, if they are inconsistent you should determine the reason and comment on it. Their inconsistency can indicate various causes including: over/underpricing, declining market or appreciation.