Thoughts of R Scott Pierce Real Estate Appraiser

A BLOG for and to my many Realtor friends. 

More and more appraisers are starting to utilize foreclosed sales in appraisals.  It is not true that foreclosed sales should never be used in a appraisal report.  Appraisers, mortgage lenders, and realtors that state this have no clue what they are talking about.  Realtors should make sure these sales are adequately described in the listing and sold data.   Do not just put the foreclosed property in the local MLS and state it was a foreclosure.  THIS IS USELSS.  Decribe in detail the condition of the home, appliances that were missing, mechanical problems, any needed repairs, concessions that were made, repair money refunded, who foreclosed on the home, if the lender made repairs, and what marketing time the REO APPRAISAL was subject to. Be truthful and many times these sales can be eliminated for use in an appraisal report, or at least give the appraiser some data in which to make an adjustment to the sale on the grid. 

It is a myth that the appraiser is ask to value the home at a reduced market value just because it is a foreclosure.  However, the requested lower Marketing Time by the lender usually always reflects a value well below the so called going market. Most lenders that order an appraisal on a foreclosure, request what marketing time the value should reflect.  This is an important part of the puzzle that tells a knowledgeable appraiser if the property should or should not be utilized as a comparable.  So Realtors ask yourself these questions when placing a sold foreclosure in the MLS.  Did the lender do any work to the home?  Was the foreclosure appraisal done as is?  What value was put on the REO ADDENDUM of the appraisal if work was completed? What marketing time was requested on the appraisal?   Any and all information you can get on the foreclosure property would be helpful.  I promise if this data is truthfully obtained and placed on the sold listing, the appraiser will be able to explain to a lender why the comparable was or was not utilized in a report.  Todays technology allows lenders to know whats happening in almost every neighborhood.  So give the foreclosure sale more time than the normal listings and we will make it out of this foreclosure nightmare.  If you need help with this, contact me at (601) 268-0900, or email me at rscottpierce@comcast.net  I look forward to any comments.