REO sales and "Market Value"

[JRice0220]

Everyone has comment language in their reports.

You have a reasonable exposure time comment, but does your analysis behind that summary coincide with the manner of exposure that led to this sales contract?

And yes, there are some very specific points being made in this thread. This is an issue that has been hotly debated on this forum for years. That means that people here disagree on certain elements of it.

Ah, that makes sense. One of the reasons I have been so hesitant to start posting here is that I noticed from my browsing that people often appear to be getting "attacked" as soon as they do something wrong or have a question (even if its kinda stupid).

As far as the exposure time. I disclosed the unique listing of "owner occupant offers for the first 15 days". Beyond that I may be confused at what you are asking. Obviously my reasonable exposure time isnt based upon only owner occupied offers for the first 15 days. But do I have to actually disclose that?

 

[Randolph Kinney]

No special financing involved. 30 year FHA.

FHA is mortgage insurance. It is not the lender that grants a mortgage with its terms and conditions.

In an effort to help stabilize communities and support the nation’s housing recovery, Freddie Mac's First Look® Initiative gives homebuyers like you the ability to purchase a HomeSteps home during its initial 15 days of listing (30 days in Nevada), without competition from investors. You do not need to be a first-time homebuyer as long as the home is your primary or secondary residence. Purchasers who do not intend to occupy the home or intend to use it for investment purposes (e.g., renting) are not eligible for the First Look Initiative but can submit offers that will be considered once the First Look period has expired.

http://www.freddiemac.com/homeownership/rent_or_buy/buying_a_freddiemac_owned_home.html

Homesteps program for Freddie Mac Foreclosures

Loans are made through Freddie Mac's lender partners as Freddie Mac does not make direct loans.

Special Financing is not offered on all properties.

Special Financing is only offered on properties in habitable condition.

Special Financing is available to owner-occupant and investor purchasers, though on different terms.

Minimum down payments are 5% for owner-occupants and 2% may be from gift funds.

Higher allowable debt ratios (You can afford more house).

Competitive interest rate (approximately 1/4 percent below the average retail rate).

The 3.5% seller contribution is to be used towards closing costs, including a home warranty, if desired and available.

Buyers should consult their lenders for guidance on financing. Lenders and mortgage products may impose their own limitations on the use of the 3.5% incentive. For example, the lender may consider the incentive a Seller Contribution and limit the amount to 3.0%. In those instances, the remaining 0.5% will no longer be available to the buyer.

 

[J Grant]

I don't have time to read all the replies, but if your subject is an REO house, does not the URAR form state the purpose of the apprasial is MV? I have done literally a few hundred REO as subject appraisals over the past several years, and we are not supposed to treat them any differntly (as a subject), unless there are insructions to do so, and you disclose that you are doing so.

You keep referring to REO sales as sold for liquidation value, which is not correct either. LV has a specific definition in appraisal terms, the definition usually states a severely restricted marketing time and that the seller is compelled to sell within that marketing time. That might be a 5 day bid or one day auction, for example.

REO's placed on MLS with reasonable market exposure don't meet the LV definition, though they can be sold lower than private sales due to condition, vacancy, appealing to property flippers etc.

Up to your market and research and trend of listings and pendings if you feel REO sales should be adjusted up, or you can appraise to higher side of value for non REO sales if you see market indicates it.

There have been numerous lengthy threads on the board for the past year on the subject, have you read them?

 

[Elliott]

JRice,
I'm just asking for your opinion as to what you think the market value of the subject is expressed in dollars?

 

[JRice0220]

JRice,
I'm just asking for your opinion as to what you think the market value of the subject is expressed in dollars?

Sorry, I can only discuss value with my client...

 

[residentialguy]

Welcome....you'll do well on the board.

 

[Elliott]

JRice,
Its okay to discuss your value with us and Chase at anytime.

 

[George Hatch]

Sorry, I can only discuss value with my client...

Good response.



With respect to exposure time, the length of time it took for this one contract to come about shouldn't be any more relevant to your opinion of typical exposure time than the contract price is to your opinion of market value (as defined) conclusion. This exposure time is a single datapoint, just like your contract price. By themselves they don't mean much.

I look at my comps to see what they're doing in terms of exposure times; and what's important to me is the length of time it took to attract their buyer after their most recent price reduction (if any). A property that was on the market for 2 years but sold 60 days after the most recent price reduction tells me that price reduction is what attracted the buyer, so I count that as the relevant exposure time. Add a bunch of those together and before you know it you've got a trend.

Other appraisers do it differently so I'd say there's more than one acceptable way to do it. .

As far as this forum goes there are certain things we expect all appraisers to know. It is possible to ask a really dumb question but the question you asked is not one of those. On the other hand if you were to cruise in here and ask us for "the list" we use to make adjustments or something like that you'd probably get a little scorched.

There are definitely worse things than asking an unfortunate question - one would be getting overly defensive in response. We have enough reasonable heads around here that if someone jumps on you too badly they'll stick up for you. In general, we give what we expect to get, too. I've been around for a long time but I fully expect that when I post something people don't like they'll let me know about it directly. A roomful of appraisers is no place for a delicate snowflake.

 

[CANative]

Other appraisers do it differently so I'd say there's more than one acceptable way to do it. .

Not this appraiser. I do it exactly that way.

 

[J Grant]

George H, I agree...when MV is above SC price, then it is, and I'll appraise above it...as you said, there is no reason to lower a MVO to a SC price just to match them up.