REO emphasis

[Jayozz]

I know this sounds like a stupid question so be gentle. When doing an appraisal in a neighborhood with REO's how much emphasis do you put on them. The appraisal I am doing has an equal mix so it's not REO driven but the REO's have sold for about 20K+/-less. So I have 2 of values to pick from in way. In the real world a home buyer will choose the lessor price despite if it's an REO, Short sale Etc. What is appropriate and what does the bank want (not the LO).

 

[Charles Knutson]

This neighborhood is a good example for comparing REOs and Owner Occupied sales -- it sounds like there may be a combined $20k discount for REO stigma and condition, which would translate into a $20k adjustment ($8-10k for REO stigma and $10-12k for condition?) up or down, as appropriate.

Does that help?

 

[JCONNOR3]

If you have a 50/50 split you better verify your non REO sales very carefully. Sounds suspect to me.

 

[tyfsu]

I know this sounds like a stupid question so be gentle. When doing an appraisal in a neighborhood with REO's how much emphasis do you put on them. The appraisal I am doing has an equal mix so it's not REO driven but the REO's have sold for about 20K+/-less. So I have 2 of values to pick from in way. In the real world a home buyer will choose the lessor price despite if it's an REO, Short sale Etc. What is appropriate and what does the bank want (not the LO).

There is no such thing as a stupid question, just stupid answers.

With that said, you really have to be certain with your data if you're going to start using REO comps to establish current market value. You state it’s 50/50, REO vs. non-REO, well that right there maybe a key indication. Think about our good old friend the Principal of Substitution. Are the REO sales similar to the non-REO sales with respect to age, condition, quality of construction, etc...? Would a typical buyer be able to tell the difference between the two properties? What are your active listings saying? Is it the same 50/50 ratio?