REO Appraisal help needed (AS IS) & (AS Repaired)

[stacy158]

ok I have an REO appraisal and I'm having questions on the "AS IS" and the "AS "Repaired part.

Example:

Say I have 3 comps and their all in fair shape but the subject has holes in the walls broken windows ...etc ( basically $4000 worth of deferred maint)

ok and on the sales comp grid the value comes out to $32,000 ...

now on the REO addendum page do I put $32,000 for the "AS IS" Value??
or do I minus the $4000 in Def Maint and make the "AS IS" value $28,000
and the "as repaired value" $32,000 ($4,000 + $28,000) to be equal with the other homes on the sales grid???

or would the "AS IS" Value be $32,000 and the "As repaired" value be $36,000 ?? ($4,000 + $32,000) ??

Help! this question keeps stumping me does anybody know the correct answer to this???

also as a side note are you suppose to check to see if the Appliances work such as AC, Fridge, Oven, etc ?? Like an FHA? or if there just there?

Thanks in advance for your help!!

 

[Tim Hicks (Texas)]

I believe your "as is" value would be similar to other homes that need similar repairs and your "as repaired" value should be similar to homes in average condition.

Frankly, I am concerned as to why you would accept an REO assignment without understanding the scope of work and the competency to perform an REO appraisal with such a detailed scope of work.

I hope you are not doing this assignment for Fannie Mae, because unless you understand their specific scope of work, you will not be receiving many future assignments.

 

[bart nathan]

As repaired should be 4,000 or more depending on market reaction.

There usually is a repair incentive ( i call it hassle costs) maybe 30% of the repair cost depending on your market.

So a buyer might want a 5200 discount for the repairs.

As is + 5200 = as repaired

Ever see flip this house? (new roof costs 5,000 added value =10,000) yeah right!!!! but its the general idea.

 

[Ray Miller]

As is value is the value the day of the appraisal.

As repaired is the repaired value the day of the appraisal. That is not a guess on your part but a researched number as to what the repairs would cost that you can support.

Now comes the kicker, most REO owners want a projected value for a sale not to exceed a certain number of days. This would be for as is and as repaired. Again this is not just a guess at number, but a number you can support like you would for an ERC appraisal.

I have found that many appraisers do not fully comprehend the amount of research it takes to do a property REO appraisal. They fail to understand the complete scope of work.

It appears you are having a hard time grasping the concept of an REO appraisal by your questions. I would suggest that you work with another appraiser who is understands and does grasp the SOW required in doing them.

 

[stacy158]

Thanks!

Thanks Bart & Ray, your answers were very helpful...Thats' what I figured ...

 

[Doug Wegener]

30% of repair costs is probably light. It certainly is in my market. Market reaction can be twice the amount of repairs, sometime 3X. And that is what REO companies are used to seeing.

It is supposed to be a market derived figure.

Where foreclosurers are prevalent, the client restricted marketing time (usually 60-90 days) and reasonable market exposure are frequently the same.

The most difficult thing in REO appraisals is accurately determing the $ amount of repairs.
How many appraisers are adequately trained to do that?

 

[Metamorphic]

The most difficult thing in REO appraisals is accurately determing the $ amount of repairs.
How many appraisers are adequately trained to do that?

What do you think of this web site as a tool for figuring repair/replacement costs. http://www.contractors.com/h/info/resources.html

I stumbled across this one day and have played with the numbers for some of the kind of stuff we'd be interested in (replace flooring, paint, replace door, etc) and they seem pretty reasonable.

 

[BOBBYGINE]

As is value is the value the day of the appraisal.
Now comes the kicker, most REO owners want a projected value for a sale not to exceed a certain number of days. This would be for as is and as repaired. Again this is not just a guess at number, but a number you can support like you would for an ERC appraisal.

.

So in the REO addendum "as is estimate of market value based on a reasonable exposure time of _______.

Ray, so you're saying the value of what the house would sell for _____ days after the appraisal. A forecasted value. I ask because this is not how I was taught. I was taught that it was a market value with the banks reasonable exposure number, not the market's. Now you've got me confused? Please respond.

 

[Tim Hicks (Texas)]

So in the REO addendum "as is estimate of market value based on a reasonable exposure time of _______.

Ray, so you're saying the value of what the house would sell for _____ days after the appraisal. A forecasted value. I ask because this is not how I was taught. I was taught that it was a market value with the banks reasonable exposure number, not the market's. Now you've got me confused? Please respond.

The REO addendum has both. Four lines of "as is" and "as repaired" values. Two with typical market times and two with the clients imposed market time.

 

[Rick Neighbors]

REO or RELO

You are saying REO, but it appears that you are talking about a RELO. Or am I misunderstanding ?

But either way, it's like Tim said. Base your values on comparables. As is would be comparables in similar condition. As repaired would then again be new comparables in as repaired condition.

You need to get that straight in your mind. Then get out your crystal ball that they handed out in class and forecast the value based on the lender's marketing time frame.

It would be good to collaborate with someone on this one! Pay them well and consider it on the job training.

Rick