REO sales and "Market Value"

[J Grant]

The REO addendum is NOT for MV conditions set on the 1004. It is a REO addendum. What is a REO? It is a distressed sale. They want to know the most probable price (MV) of a REO sale...hence why the labeled it "REO ADDENDUM"..it is for opiniong MV of a REO codition of sale.

Unbelievable! You still don't get it!!

Where, on the URAR, or the REO addendum, is there a reference to an REO being a "Distressed sale"? The word REO, means "real estate owned".

And the last is ridiculous. If the client wanted you to opine the "MV of a REO condition of sale", they would ask for it.

They don't ask for that, do they? Please provide the verbiage from the REO addendum where the client asks for that. The client clearly asks, four times, for estimates of market value. If they wanted an estimate of "market value for a REO conditions of sale", they would state that.

It is called an REO addendum, because the subject is lender owned. That seems to confuse you into thinking they want an "REO value" on the
Addendum, but that is not true. IF they take the word "REO " out of the addendum, would that help?

 

[residentialguy]

They did ask for the value of a REO. Look at the title of the form. Both FNMA and AI state that REOs are distressed sales.

 

[residentialguy]

It is called an REO addendum, because the subject is lender owned.

No, that's not why. I do a ton of sales where the subject is lender owned. I don't need a REO addendum.

REO addendums are to help the lender with it's acquisition of a home. What can they, the lender, expect in a sale.

LOOK at the first value....it's like MV on the 1004, yet they want the value of subject with exposure like in the 1004. You already gave the MV on pg 2....they aren't asking for the same value, they just want the same exposure.

 

[J Grant]

The REO addendum is to provide an as repaired value, and both an as is and as repaired value in a client imposed marketing time.

Most REO ordered reports have an REO addendum attached. Dog walking time!

 

[residentialguy]

LOOK at the first value....they want the value of subject with exposure like in the 1004. You already gave the MV on pg 2....they aren't asking for the same value, they want the REO sale with that exposure.

Sorry....they want the probable price as a REO sale.

 

[J Grant]

They did ask for the value of a REO. Look at the title of the form. Both FNMA and AI state that REOs are distressed sales.

The client is not asking for the value of an REO . They are asking for a MV opinion of the subject. The 1004 form with an REO as subject has the same MV definition, only difference is, there is an addendum attached. The addendum happens to be called an REO addendum. That does not mean that they want an "REO value" on the addendm.

The Firrea form happens to be called a URAR. Does that mean the client wants the value of a URAR, because the form has that on the title?

Makes no sense at all...:new_multi:

A client imposed marketing time could result in a lower value. If the lower value is similar to what the market sees as distressed sale prices, you can explain that in a narrative section.

 

[residentialguy]

You are sticking your head in the sand with intended use. You know the use...and if you are unsure, you need to clarify - yet you don't. either way: USPAP FAIL

 

[moh malekpour]

The REO addendum is NOT for MV conditions set on the 1004. It is a REO addendum. What is a REO? It is a distressed sale. They want to know the most probable price (MV) of a REO sale...hence why the labeled it "REO ADDENDUM"..it is for opiniong MV of a REO codition of sale.

Please don't answer my question with question. Please answer my question with YES or NO.
I repeat my question.
Do you use REO addendum for REO property appraisals? Yes or No.
If yes. Do you provide the following values?
A-estimate of "as is" and if applicable "as repaired" market value based on reasonable market exposure time. Yes or No
B-estimate of "as is" and if applicable "as repaired" market value based on client's restricted market exposure time (not to exceed 120 days) Yes or No

to answer your questions
Not all REO sales are distressed sales but some are. Distressed sale is a loaded word and can be any sale such as divorced sale, illness sale, bankruptcy sale, short sale or any other sale.
The form is called REO addendum because it is used for REO appraisals. It is a kind of scope of work that contains 4 values. Its as is and as repaired market values based on reasonable exposure time is the value conclusion in URAR that should be in compliance with the URAR market definition.

 

[residentialguy]

Do you use REO addendum for REO property appraisals? Yes or No.
Depends on whether or not the client is requiring it.

If yes. Do you provide the following values?
A-estimate of "as is" and if applicable "as repaired" market value based on reasonable market exposure time. Yes or No
Yes, unless the client instructs otherwise. And while JG disagrees, this is not based on the definition of the 1004. It's in b&w that they want reasonable exposure time, like you did in the 1004. It is a distressed sale. They have to sell it. It is contributing nothing to them. They didn't go buy it. They have to get rid of these properties or they will fail. It is undue stimulus. It does not reflect MV as defined on the 1004 and often because of this variance from the 1004 MV conditions, as I'm sure you've seen, it creates a market reaction with a lower price that does not reflect MV as defined. The reason they are ordering this is because they need to know what to expect when they put this on the market. Therefore, the reasonable exposure value may not be the same value you stated on pg 2 of the 1004.

B-estimate of "as is" and if applicable "as repaired" market value based on client's restricted market exposure time (not to exceed 120 days) Yes or No
Again, unless they say otherwise, you would fill out the complete form. This is on the same principle as "A" above.


Not all REO sales are distressed sales but some are.
I disagree. See above.

Distressed sale is a loaded word and can be any sale such as divorced sale, illness sale, bankruptcy sale, short sale or any other sale.

I agree. These are all distressed sales.

 

[Blue1]

I've done that lots of times. The *only* time I give a contract any more weight than any other sale in my dataset is when my natural inclination is really close but falls a little short of the contract price, that price still being within my opinion of value as a range.

I generally reconcile for a reasonable range of value first before narrowing it to a value conclusion. If the contract price falls at either extreme of that range then I say so in my report.


As a side point to this discussion:

If we never, ever appraise above a contract price how can we possibly justify appraising below one? Sometimes people get hosed and sometimes they score a spectacular deal. The RE market is far from perfect.

Side Point? To me, that is the MAIN point. You put it very well.