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Pre-foreclosure

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GARY TRENT

Sophomore Member
Joined
Dec 22, 2006
Professional Status
Licensed Appraiser
State
Indiana
I've been asked to do an appraisal on a home that is going into foreclosure. It seems to me that my market would be bank-owned and HUD homes but I haven't convinced myself that this is the way to go. Any thoughts would be appreciated. Thanks.
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
You need to have further discussions with your client. Some want the value as if cleaned, minor repairs made, and marketed for typical marketing times. Others want it As-Is, no repairs to be made, and a shortened marketing time (liquidation value).
 

Bama Bayou

Senior Member
Joined
Oct 19, 2006
Professional Status
Certified General Appraiser
State
Alabama
Appraise it like any other property.
 

Ruben Ramon

Junior Member
Joined
Dec 29, 2005
Professional Status
Certified Residential Appraiser
State
Michigan
what is your defination of market value? Your SOW, your market?
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
Are you doing a 2055 or a 1004? Either way, you need to know what the def. of market value is and what type of value your client needs. I would not want to do a 1004 on a pre-foreclosure with the ower still in the house. Not a good situation to be in.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
If all your comps are distressed sales then your "Market Value" definition needs to be a liquidation value definition.. They by definition cannot be "arms length" no matter if you have 100 comps of short sales....Find the 3 that weren't.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
In some of my markets sales are so slow the only people selling are doing so out of distress of one kind or another. A bank owned sale or pre-foreclosure IS the competition. Also, some of the banks are not in a hurry. I have foreclosure and pre-foreclose sales with 200 days on the market and others that sell in 30. The latter may be considered a liquidation sale. Liquidation to me does not imply "non-arms length" but that it was priced below market to sell quickly.

When I have done pre-foreclosure appraisals I have tried my best to use two of each, provide the market value based on the non-REO or pre-foreclosure properties, and then put in the addendum the value for the house if affected by the stigma of having direct bank ownership or approval necessary.
 

GARY TRENT

Sophomore Member
Joined
Dec 22, 2006
Professional Status
Licensed Appraiser
State
Indiana
The client is the father of the girl going into foreclosure. He's wanting to buy the property. He says the property is in bad shape, but I haven't seen it yet.
Anyway, he's wanting to know what to offer the lender for the property. Thanks for all the responses
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
You need to have further discussions with your client. Some want the value as if cleaned, minor repairs made, and marketed for typical marketing times. Others want it As-Is, no repairs to be made, and a shortened marketing time (liquidation value).

Pre-foreclosure appraisals are usually a drive-by. Basically, they are looking for a market analysis for the area and for homes with similar characteristics from info found in public records. They want YOU to analyze the market and to find out through your observation and research whether the market is foreclosure driven and/or short sales.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
It's the INTENDED USE, CLIENT TYPE, SOW!

<...... snip.....>Thanks for all the responses

Mr. Trent,

Do you see all the inappropriate responses forum members are compelled to post because original posters, who are licensed appraisers, can't bother to tell us the Intended Use / Client Type / SOW in the first place when they originally post? I am going to keep drumming away on this one until Hell freezes over on the forum. How can appraisers run their businesses at all when they fail to identify these things immediately when approached for appraisal services? Being the VERY first things ALL of us have to find out before we can remotely begin to work with ANY client for an assignment, how is it so darn many original Appraisal Licensed posters on the forum can't see their way to provide this information when asking questions in the first place?

I am not really posting this for you Mr. Trent. I am posting it for all the lurkers reading these threads. The message is come on people, all of you have to do this and understand these things! Why do so many of you post withholding the information until your second, third, or fourth posts? Or never provide any of it at all? It is like the forum members have to rip the information out of you in order to get it so your questions can be answered. If original posters that are supposed to know this stuff have failed to identify the problem, the intended use, the client type, etc., and can't tell us any of this ..... how do you expect your questions to be answered? None of you can answer any prospective client about anything intelligently without this stuff.

Webbed.
 
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