REO sales and "Market Value"

[Webbed Feet]

Ruled on and ruled on and ruled on; Over and over.

JGrant .. I saw it THREE times this week .. by three different appraisers who indicated because the subject was an REO, they must adjust down the market transactions ..... its not rare .. it happens everyday ....

Oh and by the way .. all three of those reports were rejected because the client requested Market Value ..... the client agreed with me ... and the appraisers argued like hell ... but to no avail .. their reports were rejected.

There are many publicly available rulings that appraisers who cannot seem to get what Market Value means through their noggins should be directed to read by State appraisal boards.

 

[PropertyEconomics]

There are many publicly available rulings that appraisers who cannot seem to get what Market Value means through their noggins should be directed to read by State appraisal boards.

I believe its an education problem ... and MOST clients should be required to take the education as well ... appraisers bow to pressure, sad as that may be, but education is very poor these days.

Frankly if the board reviewed every one of these cases, they wouldnt have time for the REALLY bad issues.

 

[Randolph Kinney]

Webbed, I like the summary in the paragraph as follows:

“This court has been reluctant to consider ‘foreclosure’ sales as ‘arm’s-length transactions’ because such sales ‘may well involve an element of compulsion on the part of the seller.’ ” Voronaeff v. Crook County Assessor, TC-MD No 110361C, WL 1426847 at *4 (Apr 25, 2012) (citations omitted). However, a foreclosure sale may be “a voluntary bona fide arm’s-length transaction between a knowledgeable and willing buyer and a willing seller.” Ward v. Dept. of Revenue, 293 Or 506, 508, 650 P2d 923 (1982). “There are narrow exceptions determined on a case-by-case basis to the holding that bank-owned property sales are not typically representative of real market value.” Brashnyk v. Lane County Assessor, TC-MD No 110308, WL 6182028 *5 (Dec 12, 2011). “[W]here the majority of sales are distress, it would seem that that kind of sale would provide a more accurate reflection of the market.” Morrow Co. Grain Growers v. Dept. of Rev., 10 OTR 146, 148 (1985).

 

[JSmith43]

Webbed, I like the summary in the paragraph as follows:

“This court has been reluctant to consider ‘foreclosure’ sales as ‘arm’s-length transactions’ because such sales ‘may well involve an element of compulsion on the part of the seller.’ ” Voronaeff v. Crook County Assessor, TC-MD No 110361C, WL 1426847 at *4 (Apr 25, 2012) (citations omitted). However, a foreclosure sale may be “a voluntary bona fide arm’s-length transaction between a knowledgeable and willing buyer and a willing seller.” Ward v. Dept. of Revenue, 293 Or 506, 508, 650 P2d 923 (1982). “There are narrow exceptions determined on a case-by-case basis to the holding that bank-owned property sales are not typically representative of real market value.” Brashnyk v. Lane County Assessor, TC-MD No 110308, WL 6182028 *5 (Dec 12, 2011). “[W]here the majority of sales are distress, it would seem that that kind of sale would provide a more accurate reflection of the market.” Morrow Co. Grain Growers v. Dept. of Rev., 10 OTR 146, 148 (1985).

Fixed it for you.

 

[Randolph Kinney]

The general standard for a Chapter 7 is liquidation value, not replacement value, but it can vary per BR district.

For a Ch 13 proceeding there is a favorable SC case (Rash) which benefitted the creditor & required what they consider replacement cost. The court did not contemplate that to mean replacement cost (cost to build new), but merely the retail cost to replace an item of personal property or real estate.

RK is taking these cases out of context because it fits his preferred narrative and might impress someone like you. Bankruptcy court has a whole different set of agendas & nomenclature. Apples and Figs.

I call BS on you. You have not responded to Chapter 13 lien stripping (second mortgage) appraisals involving a primary single family home where the owner-occupant intends to continue occupying the home, the case you claim is "... merely the retail cost to replace an item of personal property or real estate."

Therefore you haven't done any.

In case anyone is wondering about the involvement of an appraisal and appraiser for Chapter 13 lien stripping (second mortgage), it looks like this:

 

[gregb]

An interesting REO study here:
[url]http://www.clevelandfed.org/Community_Development/publications/REO/55_Lee.pdf[/URL]

 

[JSmith43]

RK, I posted the source of my comments, the American Bankruptcy Institute.

Call BS on them if you like.

Funny how you don't address the way I "corrected" your post by pointing out the obviously conflicting decisions within the post where you chose only to emphasize one that favored your narrative, without pointing out the obvious conflict.

It is clear that using BR related findings have little to do with real estate methodology/orthodoxy, except by chance. Assets in CH 7 are generally valued to a different standard than Ch 13. It may depend upon asset type as well.

There are so many nuances, it is best to have the attorney call out the type of value he wants defined in a report since he will have to make a bet as to what argument will win the day.

It takes someone with an agenda to want to use these cases as some sort of argument for the specifics regarding how an appraiser treats REO sales in an appraisal under FIRREA MV definition.

The assessor cases are more on point.


Since you are an obvious dipstick, I will have no further back & forth with you.

 

[Randolph Kinney]

Since you are an obvious dipstick, I will have no further back & forth with you.

Yes, my thoughts about you. You have an agenda and refusing to knowledge court cases on the matter of using distressed sales is yours.

Of course, being cornered by your avoidance in acknowledging public cases is not adding to your credibility.

 

[Terrel L. Shields]

such sales ‘may well involve an element of compulsion on the part of the seller.’

I think that suggests the reading can be read the other way.

BTW, I do not think anyone posting here is a "dipstick". You are all very serious, professional appraisers with a very different view of interpretation of "Market Value". I see this as airing out those differences so that we can and will understand that each of us have an obligation to defend our positions.

It is our judgment that we sell. It is our expertise that we sell. If we cannot defend that judgment, then our expertise is in question...In a moment of pique we may occasionally do a little name calling, but I am confident that no one here would not be welcome to share a a few moments over a cup of java. If you all agreed with me, I am confident I would learn nothing.

 

[J Grant]

You are very diplomatic, Terrel! Starbucks time...