REO sales and "Market Value"

[George Hatch]

Strawman? You act like there are other viable alternatives for setting standards other than the appraisal profession itself or the government.

Okay, so if it isn't the appraisers setting appraisal standards and it's not the government setting appraisal standards and (now) it's not the clients or realty agents setting appraisal standards then who else is left? I'm dying to know.


It sure as heck isn't going to be you or me.

 

[George Hatch]

Isnt' that sort of a 'it's the babies fault for playing with the knife you left out' type of argument?

So no misconduct in predatory lending or libor hugh? Totally separated argument. Who knew!?

Before inflation took hold, there is a family legend that both of my grandparents paid off their homes on 10 year notes and used to buy new cars every few years. Those simply must be urban legends.

Borrower fraud in mortgage applications was rampant and you know it. Borrower stupidity was even more common, and you know that, too. Regardless of how crooked the bankers were nobody put a gun to the heads of any of your friends and compelled them to make a purchase they knew they couldn't afford.

It's not a defense or excuse in support of the lenders or the guvmint to say most of these borrowers fully own their own fair share of their current situation.

 

[Mile High Trout]

The moral compass is supposed to set the standard.

It's wrong to trick people out of their money and wealth.

 

[George Hatch]

Yeah, it's wrong to trick people out of their money. It's also wrong to lie on a loan application. It's also wrong to buy something you know you can't afford.

The blame isn't one sided and you know it. It may be a genuine tragedy what happens when a person tries to cross a busy highway on foot during rush hour traffic but that doesn't detract from the fact that only an idiot would try to do that.

 

[Mile High Trout]

To follow up there; it's centralized banking that promoted the credit markets so heavily.

So that's why they should not have been too big to fail. They should have gone under. The fact they did not validates many arguments on the other side of the coin. Trickery and manipulation of insider processes at it's finest. They can keep the politics and the war for my mind. The people were not properly educated in credit markets, and they knew it. Even now they try to find solutions through vested parties, rather than educating the youth. It's a big insider play through and through. Seen those college campus rallies for Mr Paul on the youtube? Syndicated media quaked out of their boots when Mr Paul took 1st place in internet polling. You don't know what you don't know I guess.

The government, by the people, for the people. So when considering the decisions of the people, we'd be remiss to not remind them that most of the structure surrounding bucket shop investments was developed without their influence, and even without a drop of consideration towards their personal economic positions. But when there were suddenly so many extra dollars to go around, what poor succer would not take that bait? The theory that Americans should protect themselves from their own dollar is where the argument that it's all the borrowers fault; falls short.

 

[JSmith43]

[QUOTEStrawman? You act like there are other viable alternatives for setting standards other than the appraisal profession itself or the government. ][/QUOTE]


Oh, I forgot. I get to vote for my appraisal representative or something like that.m2:

The door #1 & door #2 you reference can have many profound variations. I guess, at this point in time it might take some visionary effort for appraisers not familiar with the field 20-30 years ago.

As I recall, the Appraisal Foundation was formed in panic mode. An REO situation with the auditors breathing down the neck

It is just a touch ludicrous that the AI and the AF ......well, you know.

The one size fits all licensing mandate, yeah, no choices there. How the industry might organize itself outside of governmental coercion? Probably 3+ viable entities, competing with each other for the hearts & minds and dues of appraisers.

I wonder which one of those entities would have come up with the 3 year prior services disclosure? Probably the one that thereafter lost the most members:icon_lol:

 

[JSmith43]

So that's why they should not have been too big to fail. They should have gone under.

That's for sure. The Justice Department can't even see its way to get to the bottom of the Corzine/MF Global outright theft of millions of dollars from investor accounts. WTF? This has to be one of the simplest who done it's in history.

They know it was at least one of a very finite number of people to pull the trigger and pay business obligations with supposedly protected investor funds.
Not even an indictment?

And we are doing cart wheels, clip board & camera in hand, allegedly to protect the public trust.

 

[Joyce Potts]

Ever wonder why a GSE orders an REO on a standard Fannie Mae form with the "traditional" market value definition in the pre-printed format? What kind of market values do the Realtors use when doing BPO's for REO's? Can you use those pre-printed forms for an REO or short sale appraisal with a client assignment condition of a 90 day sale and requesting two different values: AS IS and AS REPAIRED? If the property is trashed how many arm's-length sales do you guys usually have to extract the difference to support the condition/effective age adjustments?

Since the debate over the typical defintiion of Market Value has been beat to death, resurrected more times than this blonde can count, can someone please provide me with the standard definition of a distressed sale? And if the gap between distressed and arm's-length sales is beginning to close if not REVERSE in certain markets, do you still throw the distressed sale out even though it sold higher because the market is transitioning from over to under supplied simply because it's technically labeled/profiled as a distressed sale, i.e., Short Sale or REO/Bank Owned?

 

[cejack]

Since the debate over the typical defintiion of Market Value has been beat to death, resurrected more times than this blonde can count, can someone please provide me with the standard definition of a distressed sale?

Here you go:


distress sale

A sale involving a seller acting under undue duress. See also disposition value; forced sale; liquidation value.

Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 5th ed. (Chicago: Appraisal Institute, 2010).


disposition value

The most probable price that a specified interest in real property should bring under the following conditions:
1. Consummation of a sale within a future exposure time specified by the client.
2. The property is subjected to market conditions prevailing as of the date of valuation.
3. Both the buyer and seller are acting prudently and knowledgeably.
4. The seller is under compulsion to sell.
5. The buyer is typically motivated.
6. Both parties are acting in what they consider to be their best interests.
7. An adequate marketing effort will be made during the exposure time specified by the client.
8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto.
9. The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
This definition can also be modified to provide for valuation with specified financing terms. See also distress sale; forced-sale price; liquidation value; market value.

Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 5th ed. (Chicago: Appraisal Institute, 2010).


liquidation value

The most probable price that a specified interest in real property should bring under the following conditions:
1. Consummation of a sale within a short time period.
2. The property is subjected to market conditions prevailing as of the date of valuation.
3. Both the buyer and seller are acting prudently and knowledgeably.
4. The seller is under extreme compulsion to sell.
5. The buyer is typically motivated.
6. Both parties are acting in what they consider to be their best interests.
7. A normal marketing effort is not possible due to the brief exposure time.
8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto.
9. The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
This definition can also be modified to provide for valuation with specified financing terms. See also disposition value; distress sale; forced-sale price. See also Liquidation Value in the IVS Glossary in the Addenda.


Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 5th ed. (Chicago: Appraisal Institute, 2010).

 

[cejack]

Then what is "UNDUE"?

No appraisal context for this that I've seen so I found this pretty good definition on Princeton Wordnet:

Word to search for:

Display Options:
Key: "S:" = Show Synset (semantic) relations, "W:" = Show Word (lexical) relations
Display options for sense: (gloss) "an example sentence"
Adjective

S: (adj) undue (not yet payable) "an undue loan"
S: (adj) undue (not appropriate or proper (or even legal) in the circumstances) "undue influence"; "I didn't want to show undue excitement"; "accused of using undue force"
S: (adj) undue, unjustified, unwarranted (lacking justification or authorization) "desire for undue private profit"; "unwarranted limitations of personal freedom"
S: (adj) excessive, inordinate, undue, unreasonable (beyond normal limits) "excessive charges"; "a book of inordinate length"; "his dress stops just short of undue elegance"; "unreasonable demands"

http://wordnetweb.princeton.edu/perl/webwn?s=undue