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REO appraisals and eventual sale price question

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V. Nightshade

Junior Member
Joined
Nov 17, 2003
Professional Status
Certified Residential Appraiser
State
California
I've been doing a number of REO appraisals for the purpose of asset valuation. I like to look up what the eventual sale price -- or lack of sale -- is on the properties I appraise to see how I'm doing. I've noticed that in most cases (not all) the eventual sale price is about 15% lower than my appraised value. There are also some properties (dumps without redeeming characteristics) that are still on the market. Is this normal, since prices are dropping? Or do I need to reconsider how I am doing the appraisal and perhaps the reconciliation. (In other words, am I doing something wrong?)

Another related point: When appraising an REO for asset valuation purposes, if the property needs a giant cleanup prior to being FHA-marketable, I have adjusted for this in the Repair Addendum but not as an across the board cost to cure in the actual report. I do adjust for its condition, however, with comps that appear to be similarly-conditioned REOs. However, in the real world, we know that before the house is placed for sale, there IS some kind of cleanup. How does that figure into things? Should I be doing a cost to cure for cleaning up the dump? If so then putting that in the repair addendum seems redundant.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
Are you comparing to other REO sales and making an adjustment (if warranted) for bank ownership?
 

V. Nightshade

Junior Member
Joined
Nov 17, 2003
Professional Status
Certified Residential Appraiser
State
California
I try to compare REO to REO; usually I have one or 2 that are not REO's. I don't make adjustments specifically for bank ownership. For the non-REOs, my adjustments fall usually within quality and condition. Should I be making adjustments for bank ownership? I wouldn't think I need to if it's REO to REO as both have the same bank ownership stigma.
 

jay trotta

Elite Member
Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
different markets warrant different approaches;

if you know what the REO's are selling for, you also need to know what typical similar market sales are doing - it can't be one sided. Also this may or may not help you in determining different market factors, but you'll have to play with that a bit for Your area and see what works best for you.

there are many different factors to view, but most important is Your knowledge of the area in which you work. Your Fee is directly related to your knowledge of the area, or they would just do an AVM and guess.

go get em
 
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