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REO Basement Walls and on Market past two years

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Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin


Subject is REO property.

Subject property sold in 1997 for $108,000, on the market in 2006 for $214,900 and $2007 for $189,000.

Five Sales from $157, $250,000

Similar Sales in past six months indicate it should sell for $165,000.

Listing are $139,900 to $279,900 Five listings.

Home is in average condition, using similar comparables, near grade school and next to public park, home is on dead end street that ends at park.

The kicker is the basement walls, they look to have been leaking and then patched from the inside. Still having some water problems. Cost to cure is from $6,000 to $24,000 no sure way until subject property is inspected by a foundation contractor. I have called five different ones.

The real estate agent told me that his BPO came in at $42,000 which is way off I think. But she also said she had an appraisal that showed the property to be worth $50,000 because of the foundation.

I used non-REO sales comparison for this subject. The town has none similar to the subject in the past 12 months.

I am thinking I should mark box 4 call for a foundation inspection. Put a statement that if problems are found it will alter the value of the subject property.

How would you look at this one and send it off to the lender??


Pictures show wall condition and water stains on floor.
 
Last edited:

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
Agent says it's worth $42,000 and you think it's worth $165,000? Or, are you talking about cost to cure the foundation problem?
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
Agent says it's worth $42,000 and you think it's worth $165,000? Or, are you talking about cost to cure the foundation problem?


Agent thinks it worth $42,000.

I think it worth $165,000 if the foundation is not a problem. I check box 4 and ask that they have the foundation inspected.

When I went to get a repair cost, I was bid $6,000 to $24,000 depending on what the problelm was and the cost to fix the problem. I talk with three foundations contrator and they were all in that range.

As I stated in the appraisal there is no real way to set the cost to cure until it is inspected. If it is on the low side current value would be around $159,000. If it is on the high end to cure then it is worth around $141,000. The rest of the home is in nice condition, not your standard REO trash out.

I don't know what to think about Real Agents and BPO's. Just talk with the auction company that I refer large RE auctions to. They got a BPO on an appartments complex that is going into foreclosure has $990,000 owed, on the tax books says it is worth $754K when full in good times. The place is now 80% empty, in disrepair. I think some where around $350K or more to bring it back and them maybe six or eight months to get most of the units rented. The BPO's came in at $1.3M and $650K. My inhouse appraisal between the two auctions compaines brought it in at $450K with a cost to cure of $350K. I told them to advise the bank of a short sale of around $550K.

On the above house I think my figures are sound for the area.
 

G-man

Member
Joined
Feb 4, 2002
Professional Status
Licensed Appraiser
State
Ohio
What is the time frame for $165K?

In my area, Realtors are listing homes so drastically under market it is absolutely not funny. Appraised three homes in S.E. Michigan, where the sales prices were all in the mid to low $60,000 range. Two of the three previously sold for more than twice that a few years ago and needed almost no work to bring them to good condition.
Maybe the Realtor is under a 30 day or less marketing time. $40K would certainly clear that property off the books, even with foundation problems. From your pictures, the walls look straight, that's a bonus. Better than mine ;( .
 
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