REO Appraisal

[Tom4value]

Some appraisers mistakenly think they need to find "REO comps" for a subject that is REO-owned (or in pre-foreclosure)

That is not true - though sometimes REO sales are the best comps, orther times, they are not. An REO appraisal usually asks for a market value opinion - though it can also ask for a second market value opinion with a restricted listing /DOM exposure - the client should have it on the engagement letter what they want, or ask. Or have an experienced local appraiser help with the assignment

Technically, you are not wrong (about needing an REO comp) but like other issues where appraisers think that you “have” to do something, you do it because that is what your peers do. Most but not all clients want a market value and a “liquidation” value. I have seen old school appraisers say, “Hey Mac? Whaddya give for a discount for liquidation value?”. Of course, good appraisers would use an REO comp to extract an adjustment for the REO, since buyers rarely pay full market value for an REO. Best if you use several (doesn’t have to be comparable to the subject if you comp it out to the REO property) to derive a percentage adjustment as opposed to a dollar adjustment.

 

[sputnam]

Most of those requirements should be clearly stated in the engagement letter. Some REO assignments require an as is and as repaired value. Some only want one active listing, some want 3. Some want the REO addendum, some do not. Some want the 2010 version of the REO addendum which asks more details on the active listings. Some want the repairs itemized and not a lump sum. I prefer using the REO addendum since the preprinted verbiage adds an element of protection. ie, not a contractor, etc. The client should tell you what they require.

Should be... but often aren't.

 

[Tom D]

FHA REO value definition is different from a conv REO value. Why, i know not. Maybe some better brains here can clarify why.

 

[J Grant]

FHA REO value definition is different from a conv REO value. Why, i know not. Maybe some better brains here can clarify why.

? Where is the statement for that?
I have not found a definition of "REO value".
Its market value - if there is a limitation of market exposure that might affect the value. Some REO assignments require a second value opinion with a sale under 60 days, for example. That can be often be found on a REO addendum.

 

[Tom D]

Ehhh grant, glad you could remember the FHA market definition thingy name for REO use. As much of FHA that i did, it was only a few FHA REO that i saw that definition needed.
It was a specific FHA definition of how FHA defined market value different than what we normally use. I know somebody here knows it, have seen it here. Blah, blah, blah who cares anyway, the order should tell you. Never Mind.

 

[Sadie]

My main REO client wants as is non REO comps. But some want REO comps if available. It depends is the answer.