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Answers (9)
- Dan, "the_country_hick"
- Contributions:4699
If 5 properties sold for $500k how is it ethical to NOT include them in an appraisal or a C.M.A.?
A house sold. As it sold it is now a comparable sale. What is missing from this scenario? (nothing)
A house sold. As it sold it is now a comparable sale. What is missing from this scenario? (nothing)
- John Carden, "CARDENJC"
- Contributions:11
The appraisers must include these REO, HUD, short sales, etc in their calculations if they are in the neighborhood and of comparable size.If that is all that has sold in an area, then yes that is all they can use. If there is a blend of comparables then they used a blended approach. (some REO, some not REO and so forth)
- Damon Botticelli, "DBotticelli"
- Contributions:121
With REO and short sales accounting for more than 70% of Las Vegas home sales they have become the norm, so yes it is appropriate to consider them when establishing opinions of value in our market.
- Pasadenan
- Contributions:21466
Here is Zillow's answer; not for "appraisals", but for estimating values:
Price Differences Between Foreclosures and Non-Foreclosures.
Price Differences Between Foreclosures and Non-Foreclosures.
- Suzie Marquardt, "NevadaShortSales"
- Contributions:91
Thanks for asking that question. The answers were very informative. I know I learned more about how appraisers do their job. I know you received some great information. Thanks Vince & Matt. Suzie Marquardt
- Vince Curtis, "SoCal Appraiser"
- Contributions:4699
Here is an example of WHERE we note the type of comparable sale on an appraisal form...
- Vince Curtis, "SoCal Appraiser"
- Contributions:4699
Simple answer is appraisers use REO and Short sales when there is a lack of standard sales in an area. Market based differences MAY be accounted for, if they are quantifiable, but many times not. Usually an appraiser, if they use both standard sales with REO/Short sales, place MOST weight on the standard sales in the value reconciliation on the appraisal.
We do note what TYPE of sale it is in our new UAD forms...
We do note what TYPE of sale it is in our new UAD forms...
- Matt Kammeyer, "BrokerSalesman"
- Contributions:26
Rich,
That is an excellent question that has been brought up many times to the Appraisal Institute, who regulates the ethics of appraisers. In my discussions on the topic with prominent appraisers, the subject property should be valued with like characteristics, including if the property is distressed or not in comparison to the comparable sales. Since buyers pay a premium for properties that are not short sales or REO (bank owned) that should be taken into account in the appraisal. The problem lies in many residential appraisers who do not take the time to evalutate the distressed vs non-distressed (that is coming from other appraisers).
So if you disagree with an appraiser and have evidence to back up your claim, you should most definitely, and professionally, approach the appraiser to discuss.
Edit-To answer your question, the appraiser is giving their opinion of value, so as far as legal, as long as they are licensed, they can give their opinion, which will probably be different that the next 5 appraisers that look at the property. Its a constant challenge in the real estate market, since buyers and sellers should determine value, not someone elses opinion. As always, seek legal council for any legal disputes or in looking for legal advice. Good luck!
That is an excellent question that has been brought up many times to the Appraisal Institute, who regulates the ethics of appraisers. In my discussions on the topic with prominent appraisers, the subject property should be valued with like characteristics, including if the property is distressed or not in comparison to the comparable sales. Since buyers pay a premium for properties that are not short sales or REO (bank owned) that should be taken into account in the appraisal. The problem lies in many residential appraisers who do not take the time to evalutate the distressed vs non-distressed (that is coming from other appraisers).
So if you disagree with an appraiser and have evidence to back up your claim, you should most definitely, and professionally, approach the appraiser to discuss.
Edit-To answer your question, the appraiser is giving their opinion of value, so as far as legal, as long as they are licensed, they can give their opinion, which will probably be different that the next 5 appraisers that look at the property. Its a constant challenge in the real estate market, since buyers and sellers should determine value, not someone elses opinion. As always, seek legal council for any legal disputes or in looking for legal advice. Good luck!
- SteadyState
- Contributions:787
I am not a lawyer so I cannot give a legal opinion. However, the appraisal should reflect the true market - the appraisal should include foreclosures, REO sales, and short sales.
If the price of oil drops because Iraq or Mexico is desperate but Saudi Arabia and Iran are not, do you think the price of oil will reflect only"asks" from Saudi Arabia and Iran? NO! They will have to adjust their prices downward as there are suppliers willing to sell cheaper than them. Now whether Iraq's problem is due to over drilling or Mexico's is due to desperation of needing capital - who cares? The price must go down!
Ditto for housing - it is a market!!!
If the price of oil drops because Iraq or Mexico is desperate but Saudi Arabia and Iran are not, do you think the price of oil will reflect only"asks" from Saudi Arabia and Iran? NO! They will have to adjust their prices downward as there are suppliers willing to sell cheaper than them. Now whether Iraq's problem is due to over drilling or Mexico's is due to desperation of needing capital - who cares? The price must go down!
Ditto for housing - it is a market!!!
Is it appropriate / legal for a real estate appraisal to rely upon foreclosure, REO, and short sales
May real estate appraisals rely upon foreclosures, REO sales, and short sales in the calculation of an appraisal value for a home that is on the commercial market set for an arms length public sale.
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