REO sales and "Market Value"

[J Grant]

I have no idea what DZ meant referring to what I said? Since I have posted often on the subject....I have never said, or tried to imply that one should "always " use REO's as comps...? (If that is what he meant)

 

[JSmith43]

As long as I do what I say and say what I do I'm good; I'm only responsible for what I do, not how they make their decisions.

That makes about as much sense as when Popeye would say I am what I am.


If an appraiser is asked to appraise to a definition, but ignores the conditions of the definition, do what you say & say what you do means the appraiser should have declined the assignment if he was just going to ignore the conditions.

Disclosure is a poor excuse. I'd change the saying to do what you agreed to do or don't offer to do it & leave it at that.

If someone orders cheesecake & you deliver apple pie that looks kind of like cheesecake disclosing that it is cheesecake that looks like apple pie, expect an angry customer eventually even though the cheesecake was disclosed upon delivery.

 

[Terrel L. Shields]

distress properties, those properties will, in effect, establish a value ceiling. "

Really...I figure that distressed properties establish the FLOOR of value....

Unfortunately, nobody really understood this definition....

certainly not the people who wrote it. It looks grand and glorious however...
According to the latest from Realty Trac, short sales are selling for substantially more than foreclosures.... OK....is anyone trying to make the case that the SELLER is the OWNER and the OWNER is under pressure to sell therefore a SHORT SALE can meet the test of "Market Value"? And if not, the how can an REO be a "market value" sale.

I've seen the same MV defintion used in USPAP, in the Interagency guidelines, Fannie ame, etc.....for 20 plus years now. Tell me again why and how it is a "moving target". Did "depreciation" change? Is arm's length a flexible definition meant to use applied by the appraiser as fits the situation? Is Highest and Best Use changed according to the terms of the sale or who owned it? dontinkso

 

[JSmith43]

I attended a seminar hosted by the national short sale manager for the Stagecoach Outfit about a year ago. It was a freebie, there was standing room only by the time I got there.

The big company was trying to promote their new, streamlined short sale procedures to agents and brokers and other interested parties (me, for example). According to this guy who was in a position to know, the StageCoach company as a loan servicing entity and having substantial portfolio as well, figured out that they netted about 10% more by agreeing to short sales than going the foreclosure route.

That isn't the same as saying that short sales sold for 10% more than REO, but it is interesting anyhow

 

[George Hatch]

That makes about as much sense as when Popeye would say I am what I am.


If an appraiser is asked to appraise to a definition, but ignores the conditions of the definition, do what you say & say what you do means the appraiser should have declined the assignment if he was just going to ignore the conditions.

Disclosure is a poor excuse. I'd change the saying to do what you agreed to do or don't offer to do it & leave it at that.

If someone orders cheesecake & you deliver apple pie that looks kind of like cheesecake disclosing that it is cheesecake that looks like apple pie, expect an angry customer eventually even though the cheesecake was disclosed upon delivery.

To restate the obvious, this whole discussion is about exactly what those assignment conditions entail.

LOL, I don't know what makes you think I'm not following instructions or doing anything contrary to the prevailing assignment conditions. I've had some of the same clients - regulated banks - for more than 20 years now. Not just any appraiser can honestly say that. I didn't successfully pull that off by being an idiot in my work or associating with mortgage brokers.

I will say one thing - I'd much rather get caught doing what I say I'm doing than get caught doing something different. That could have drastic consequences. I mean, this is the internet where information lives forever, and I run my mouth quite a bit whilst posting under my real name. It would be catastrophic to my personal credibility if I were to play the game and get caught at it. It's just too easy for people to check up on me.

 

[JSmith43]

Jgrant was "trained by MAI's" & I bet she has had the same clients for a long time.

I've had long term business relationships, one recently rekindled based upon their positive experience with my valuation services over 25 years ago! Does that give me a ticket to somewhere?

No one should be impressed with anything other than their own reasoned conclusions. Steal the best ideas. They are free on the forum. So are some of the worst ideas. Sort them out. It's your call.

You guys (GH & JG) are starting to sound quite a bit alike, but only when GH posts on this particular topic, it seems

I still respect you, GH (kind of like offering an overall quality/ condition rating), but I call them like I see them. No ring kissing here.

 

[residentialguy]

When you can prove that a bank is not atypical, (eg not highly motivated) and doesn't mind not selling that house for many years, then we can talk about moving it into the MV class.

 

[PropertyEconomics]

When you can prove that a bank is not atypical, (eg not highly motivated) and doesn't mind not selling that house for many years, then we can talk about moving it into the MV class.

 

[George Hatch]

So, uhh, what about what these banks are actually doing with all those non-performing loans. You know, the ones they're allowing to go for 2+ years without a payment?

They're actually doing this, the definition of "distress" notwithstanding. On a conceptual basis what's the difference between a lender carrying a non-performing note for so long vs carrying the asset itself during the same time frame? Either way they've got money out that isn't coming back and they're supposedly "not allowed" to carry the loss without setting aside the reserves to cover it (which they're also not doing).

Either way they are carrying those losses for years. And the banking regulators and the politicians are not only allowing them to violate these sections of applicable banking regulations, they're encouraging it. That kind of brings to the fore a question about exactly what is "legally permissible" when the authorities are permitting this ostensibly unlawful conduct to continue.

Now tell me again exactly how distressed they are with respect to these individual sales. Their actions don't always sync up too well with the stereotype that they're desperate to sell. Moreover, the actions of many of the other sellers in the market obviously aren't all pristine, either.

MAYBE the lenders aren't doing this in the $50,000 markets. I wouldn't know. But we have them behaving pretty casually about their $300k and $500k and $1+mil non-performing loans in this region and by now they've been at it for years.

In all seriousness, who's under more distress in selling a home in a declining market? The lender's REO Dept that's selling hundreds of them every month or that "traditional" seller who maxed out their financing in 2006 and has finally come to the conclusion they're never going to get their equity back? The only differences between the two that I can see is that you'll almost never know how distressed some of those traditional sellers are because they generally don't disclose their true position.

What you guys need to help America recover is a definition of MV that specifically excludes economic stress as an element of acceptable seller (only) motivations. That way you can continue to use your sales comps from 2005 in perpetuity.

 

[residentialguy]

So, uhh, what about what these banks are actually doing with all those non-performing loans. You know, the ones they're allowing to go for 2+ years without a payment?

George, stop playing thick. You're not that stupid. What do you think would happen if they dumped all the shawdow inventory on the market? Do you think they'd be better off doing that? They're not dumb. Yes, they do affect the market. They are holding them to create a lil fantasy eutopia in the housing market. To many, giving a cursory look at the housing inventory, it appears to be back to levels last seen in 2005. If the market is healthy, why are we seeing a large number of short sales? If supply is so low and demand is here, why are banks restricting inventory? Prices are stable, even increasing, people are feeling better about the market, REOs out there are being flipped. But make no mistake...they are atypical/highly motivated. They are very distressed. They choosing a hope and a prayer and crossing their fingers.