Too Much for the Money?

[David S. Roberson]

Sounds like a typical REO around here. Twice the work, twice the fee.

 

[BarbaraNJ]

Have done REO's in the past, and the requests were similar, but fee MANY years ago was $350. Fee should probably be near $500. nowadays.

No problem with the "as is" request, or interior photos.

"As improved" is a bit dangerous, as it will require many disclaimers. Lets say you require all new kitchen cabinets. You will appraise as though the quality installed is in keeping with the area. What if they install a very inferior product?? Is your value still valid???

As to opinion of repairs, this is incredibly dangerous. You cannot see behind walls and could miss significant insect/water/mold damage. (the list goes on...)

I have, along with my Appraiser License, a State Building Inspector/ Building Subcode Official/Construction Official Licenses (took 3+ years)
and I WILL NOT estimate repairs. I suggest they get a building inspector or engineer. The only thing I will say about repairs is if something is very obvious---like a broken window or hole in the roof---I note it and recommend it be repaired.

Finally, about the MLS. I don't know if you pay a membership fee to join the Board like we do in NJ, but I THINK you have to get their permission to reproduce and distribute/publish their information. You may want to check to be on the safe side.


As Always,


The Harder I Work, The Luckier I Get

 

[Restrain]

As to cost to clean a property:
I caught the guy that does it for the primary REO people. There's about 3 companies that have the bulk of the business and I asked him what they charge. In our area (Dallas/Ft. Worth), the fee is $500 for a clean-up and lock change. That's coming out once and doing the job no matter how little or how much. There's probably a make-ready company in your area. Just call and ask.

 

[Joker]

I thank everyone for their input but still no one is addressing the issues I raised. I don't have a problem with interior photos; to me it was just an indicator of a potential poorly maintained property.
Secondly, did I mention that this is a RURAL area, near the least populous area in the state of Ohio?
Barbara-- thank you for your input on the repair situation. That's exactly what I am talking about. I am not a certified home inspector. If they have someone else tell them what needs to be done, I can estimate the cost to cure and its impact on value. (Let's not be stupid, here, I DO know what certain homes may need ie new carpet, etc. But the comments of this person indicated to me a situation that was worse than paint and carpet could repair.)
RStrahan-- The REO properties that I am aware of here are not cleaned up by a "company" they are cleaned up by a friend, relative, or neighbor of the lendor or listing agent. Sometimes paid in cash to those "on the system." (read welfare). I can get the costs to clean up by asking those who have paid such persons, however, it seems that simple cleanup is not the problem.
Randy-- I informed the client about the lack of MLS listings, they said I had to use them. Could not be left out and they had to be comparable. Expand the area if necessary, I was told.
Does no one have a problem griding out listings as comparables, especially when MLS is not a major factor in sales? Or when the market is flooded with listings?
Maybe I am trying to be too meticulous in my work.

 

[Roger]

I don't have a problem putting listings on a grid. I often add a listing as a fourth comp, if no good close comps are available.

I do note, however, that the listings do not indicate the market value of the subject, but do indicate the upper limit on the indicated range of value.

 

[Ross (CO)]

Gridding out listings from available MLS data is fine. Just show in respective grid fields certain needed wording like "Active Listing" (Date of sale) , current D.O.M. and do check the full list history of that address to see if there are concurrent or overlapping listings, price field as "List...$zzz.YYY", financing as "TBD" for to-be-determined, and under concessions I often will put "-X% price negot." and put in then the dollar amount of likely, typical or expected difference between that current list and how the other sales closed, i.e. Comps 1, 2 and 3 closed at 95%, 97% and 99% of their list price then the average is about 97% (-3% price negot.) and put that dollar amount with minus sign in the field and at least you have a likely, typical or expected amount of price drop for that listing as it becomes a closed sale. If you gridded another 2 or 3 sold comps but did not use them at least note their %-of-list sale price and consider an average from the overall group of comps and explain that step in addendum if you feel it helps. They want to know how the subject market is offering other homes so maintaining as much similarity to subject is critical and you want as few adjustments to those list-comps as possible. It is your "forecast" of the current market pulse the client seeks as they are concerned with un-loading a property on their books and want to do it as quickly as possible. Proper pricing will speed that up.

 

[The Bob]

Problems/Concerns I had with this: 1.) MLS is not widely used by all realtors in the area of the property. It represents maybe 50% of the sales and listings. FSBOs would be left out, even though they may be more comparable.
2.) Griding out listings could be misleading because: a) who is to say the sales price is anywhere near the asking price, b) what about sales concessions, etc. c) What about DOM? d) The market here is flooded with about 16 months worth of listings at the current sales rate, assuming no more listings. e) Many people are offering their homes for sale at above market rates. f) Sales are down in numbers.
3.) I am not a home inspector. If I suggest improvements or overlook others, am I not opening a can of liability worms?
4) The requester wanted a 3 day turnaround and was willing to pay $275.

#1. Why not use the FSBO's and just explain?

#2. How would that be misleading if you label it a "listing"? All of the items you list (concessions, days on market etc..) are irrelevant to a listing. Why not include data on list/sales ratio?

#3. No you are not, but you are an appraiser. And part of your job is to estimate repairs. If they are really extensive, tell the client you will need a contrator's estimate of repairs. Also, I always put in a disclaimer regarding the limited scope and nature of my inspection.

#4. Thats a business decision only you can make.

I do these all the time. It could be a good source of revenue. These clients REALLY want to know what the condition/value of the property are. There is way less liability with these type assignments than a typical appraisal with a potential unhappy buyer/borrower.

PS. I am seeing a good increase in these REO assignments.

 

[Joker]

JimBob,
I stated the fact to the client that MLS is not widely used and mentioned FSBOs and the client said they could only use MLS listing sheets. I do still think DOM is important to a listing. Around here, homes are usually offered for 1-3 months at one price and the price is lowered until the sale finally occurs at the end of 3-6 months. The newly listed home is usually priced above market. (We have more realtors per capita than anywhere and several will take any listing at the owner's price). SO why isn't DOM significant. If the homes drop in price 5% after the first 6 weeks listed and the sales price is 5%-10% of the list price, won't using a new listing result in a 10%-15% inflated value?
I appreciate your idea of inserting a disclaimer regarding the limited nature of an appraiser's inspection. I think I will start including one of my own.
I guess there is nothing wrong with this type of assignment but I have at least found out what an approprite fee is for this job. With the economy (national and local) being what it is, these assignments may become very frequent. I have done other REOs before but never had a request for so much for so little.

 

[Dale Smalley]

This sounds like a typical REO appraisal we order all the time. If it is though an AMC is because they have no relationship with an appraiser in the area. The reason the repairs and listings are important is to determine if repairs are warranted or to be left for an investor. And therefore investor incentive has to be considered. Active listing help us set the asking price based on the competition and estimated days on market. And again this is compared to the REO Listing Brokers estimate of the same market conditions usally called an REO BPO.

I would suggest you do them, it is the most accurate appraisal method for setting a sales price.

 

[EDWARD BERRY]

Take the assignment at the most they will pay.

You will loose money on the first one even at $450.

However, on the next one you will sail through it.

If you think DOM is important, put it in the report along with the data you have shared with us.

GO FOR IT-ed in arkansas