REO sales and "Market Value"

[George Hatch]

If I recall correctly "most probable" has been around since before I started appraising in 1985. It predates licensing.

Besides which, who cares what used to be? That was then and this is now and "this" has been "this" for a long time. If and when the banking regulators decide to modify or switch up value definitions then that will become the relevant version.

We can argue about what should be all we want, and truth to tell I think there's some merit is revisiting the question of what definition of value is used in a mortgage lending assignment. But none of that alters the fact that the question currently being asked is what's most probable in the market.

I'd have no problem with going with a definition of highest supportable value, if for no other reason then it would relieve our own market bulls of their constant search for validation as they "work extra hard" to make everyone happy. Let the buyer beware. Let the lenders do their own underwriting and take responsibility for their own decisions. It's all fine by me.

 

[J Grant]

My opinion (Which is not worth much, it seems)...tying in price to value within the definition is the problem. Either we are opining value, or we are opining price.. Tying them in to one amount is contradictory: "Market value is the most probable price a property should bring "...(till end of definition) . How can value and price always and forever be one and the same?

Is our opinion supposed to be the exact point where price and value meet? That is an almost impossible goal, not only because of market variances, but because of the conflict of interests inherent in the meaning of value.

The best value for the buyer is a lower price, but that is the worst value for the seller, who benefits from a higher price. The SC price may be the best value for making a deal work, but might not represent the value of the property all that well.

How about this. Remove the word price: "Market value is the most probable amount a property is worth in the open and competitive market ..(till end of definition)

Changing the word "price", to "amount", would lessen the impact of motivations and terms and condition of sale. There will always be some buyers wanting to pay less, and some willing to pay more, than a property is worth, and there are always be sellers who hold out for more, or who will accept less, than a property is worth.

If we are only expected to opine value, then the bank could lend up to a price that is more or less than the value, depending on buyer credit, amount of $ down, quality of property and location...whatever criteria the lender wants.

Prices are part of the elements that have to be there for determining value, but expresssing the value opinion as an amount of monetary worth, rather than an amount of monetary price, might alleviate some of the MV def problems.

 

[JSmith43]

Besides which, who cares what used to be?

That was only important because I was picking on Jgrant for being so sloppy with her representations & it was part of her post that was factually incorrect & easily provable, should I take the trouble to boot up an '80's computer & pull off the old MV definition for a post attachment.

I'm glad you are in agreement that the MV definition in T11 could use another look. Since the fiat money ponzi scheme has about run it's course, and World trade is about to collapse, causing mass starvation, war & riots, perhaps we should just take this up next decade, if the nation survives.

 

[J Grant]

Take the trouble and boot up your 80's computer and retrieve the old definition, J Smith, since you seem intent on picking on every single word of my posts...GH just said that the phrase "most probable" has been part of the market definition since the 80's. Whether it was highest price or highest most probable price...it is an outdated definition but if you have it stored in your computer, by all means get the exact one .

 

[JSmith43]

Take the trouble and boot up your 80's computer and retrieve the old definition, J Smith, since you seem intent on picking on every single word of my posts...GH just said that the phrase "most probable" has been part of the market definition since the 80's. Whether it was highest price or highest most probable price...it is an outdated definition but if you have it stored in your computer, by all means get the exact one .

WTH does he know? He would be wrong if he were implying that the definition used in GSE work prior to the current definition used the phrase "most probable." But, that wasn't his point, which means you are wrong once again in thinking he was backing you up.

 

[Randolph Kinney]

The house was Owned by Greater Metro Housing Corp. I don't care if you want to call it a flip or a Corportation owned. I've stood my assertions with more facts than you ever hoped I could... you're just making a fool out of yourself.

Concerning 2731 Knox Ave N last market sale:

You have over 3 years of ownership since it was purchased as an REO.

It this your definition of a flip? :laugh:

Is the question of who owns it or the form of ownership?

Only a fool insists that a flip sale occurred over 3.5 years later after purchasing a REO property.

Only a fool insists that a corporate owned house means a flip was involved after presenting the data that 397 days on market occurred before the last sale.

Only a fool insists that investors are quick to move the property after posting that data of 397 days on market.

Now, care to answer why haven't these 29 REO sales showed up in your 40 sales data as flip sales? Who is holding them? How long have they held them? Why are they holding them?

 

[residentialguy]

Randolph...I know you can't be that daft. The seller of the house in 2012 sale was corporation owned that offered a $20k grant with it. You need to give it up. You're plungin so low it's hurting me to watch.

 

[J Grant]

JSmith, since you are so invested in proving yourself "right", (or proving me wrong) find the older definitions and post them!

 

[moh malekpour]

Originally Posted by DMZwerg
Disclosure or not is one thing, *RISK* is what causes the difference. When a non-foreclosed property did not have fair disclosure the buyer has a better chance of successfully reclaiming all or a portion of their loss. Whe the property is a foreclosure there is less recourse as the buyer is assumed to be assuming the risk (thus sale price consistent with disposition value rather than (FIRREA) Market Value).

Yes, the REO home is vacant and there is no seller disclosure involved but if the property is in good condition, the assuming risk can be easily offset by the buyer hiring a qualified, insured home inspector. the seller disclosure statement covers only items that seller in the best of his knowledge knows and if there is something hidden that seller can claim that he didn't know about it, there is not much the buyer can do about it. For that reason, there is a common practice now to hire a qualified home inspector and don't rely much on seller or agent disclosure statement.

 

[Randolph Kinney]

Randolph...I know you can't be that daft. The seller of the house in 2012 sale was corporation owned that offered a $20k grant with it. You need to give it up. You're plungin so low it's hurting me to watch.

You still have not answered why this investor held the property for over 3.5 years and waited 397 days on market before selling it.

Corporations can own houses. That does not automatically make a future sale a flip sale.

Individual sellers offer financing and cash back at closing. Corporations can do this too.

Besides, what about 2951 Colfax Ave N that you identified as an investor flip sale, and previously REO?

Where is the flip? Where is the REO? m2: