REO sales and "Market Value"

[J Grant]

No it's not...if they want the value of a sale with undue stimulus and the seller is not typically motivated, then they will have to use another means than the 1004, like a REO addendum. You can add other market values with different conditions applied to that value, but page 2 is for market value with the conditions explained in the definition.




The want different conditions regulating the market value. The 1004 does not want REO value...no undue stimulus. You won't find REO mentioned under the subject for consideration in the sales grid, but you will for the comps. (if they have undue stimulus, you would take that into consideration). But the subject is a presumed sale and the current state of being a REO is not a factor.

The REO addendum, what do you see in the grid? Is the subject a REO? Now, it wants you to take that the subject is a REO into consideration! The MV definitions of REO at the bottom of the page are nothing like the MV conditions set on the 1004.

You absolutley don't get it. You have FHA stating they want MV on an REO addendum, Fannie says the same, the REO is ordered on a 1004 form with the definition of MV on the cert, the REO addendum states "market value" on all four values...the only difference is that two of the values has a client imposed DOM.

If you refuse to believe it, you refuse, what can one say .

 

[residentialguy]

You have FHA stating they want MV on an REO addendum.

Please provide that link where they say that they want the identical conditions of sale, because that's impossible. Limiting the exposure time is changing the definition of MV.

 

[J Grant]

It's in y post 313. FHA does not have another link where they state again that they want MV on the REO addendum...it says it right there on the REO addendum.

The limited market exposure does not change the definition of MV, the definitiion is the same, but it modifies the conditions that can change the value...such as a 30 or 60 day imposed marketing time. It is still a MVO opinion, just one with certain conditions attached. For example, you could easily have homes selling in subject market area within 30-60 days. How about a high priced sale that sold in 10 days with multiple offers? Is that not a MV sale? Just because a home sells in short DOM does not mean it is a distress sale or sells for low value. If you find homes selling for less in 30 or 60 days then homes on the market longer, then that would be the discount applied to the MVO to get the 30 or 60 day DOM most probable price.

I have done REO appraisals where there is no measurable difference in sales sold in 30-60 days, so the opinions of value are the same.

 

[residentialguy]

Did you switch gears...Are you talking about a purchase of a REO now? (203k) That's a different intended use. That is for financing.

 

[J Grant]

Res Guy, I can't keep answering you because there is no answer . The REO addendum states they want market value on all four values, what can I say?

 

[residentialguy]

The limited market exposure does not change the definition of MV, the definitiion is the same, but it modifies the conditions that can change the value...such as a 30 or 60 day imposed marketing time.

That is absolutely wrong! Market value is based upon it's definition. Exposure is a condition of that value. It states 5 conditions. You are changing one of them, therefore it is not market value as defined. It becomes a different type of market value.

You could have the market value of a house that includes Jessica Biel swinging nekid on a chandalier as a condition. But that is not market value as defined on the 1004. Just as a limited 30 or 60 day imposed market time is not market value as defined.

 

[J Grant]

Don't blame it on me! I didn't write the REO addendum! Please read it, and tell me what it says they want for each of the 4 values...

 

[residentialguy]

Don't blame it on me! I didn't write the REO addendum! Please read it, and tell me what it says they want for each of the 4 values...

I did. Show me where the conditions are to be identical to the 1004. It is not the same market value. There are many types of market value.

The 4 values are too vague. It needs to be clarified.

 

[J Grant]

You keep stating there are many types of market value. That is not true, there are not many different "types " of MV...There area several accepted definitions of MV ( market value, distress sale value, LV.)

There are other types of value, such as value in use, but those uses are not not defined as MV.

 

[residentialguy]

Market Value?

Market value is defined in the URAR/FIRREA/AI/USPAP, etc. I'm not trying to step on that. Those are the conditions that the client may want. Market value is often used to show the value of a property within other conditions set by the client (which is a mis-use of the term MV). That's why is it important to know the intended use and clarify when the value asked doesn't make sense for the intended use. They may not be wanting market value. They may ask for “market value” but don’t define or understand the term.

Some clients want to adjust the appraisal conclusion by stipulating terms in the analysis, e.g. a sale within 30 days. This usually results in a variance from the commonly-used definitions of value and the appraiser must then define the term within the document to ensure the client and intended users understand what type of value is conveyed in the report. The client may want value with most probable price as defined by FNMA, value where you find the most probable price of an extreme compulsion to sell (aka liquidation), value of with seller compulsion to sell (aka disposition value), value where you find the most probable price of a REO sale, value where you find the most probable price of a Short Sale, value where you find the most probable price of an estate sale, value where you find the most probable price of relocation, and other client-defined terms. etc.