Foreclosures as comps?

[buykguy 0]

Hi all, can anyone tell me if appraisers are using short sales, or foreclosures as comps? I mentioned L/O my house and after looking at comparables, I almost fell out of my chair. Of course the recent sales were foreclosures. Any comments?

 

Cheers!

 

Mike

[Jonathan RexfordFL 8]

Mike,

Appraisers will take distress properties into consideration when figuring an appraisal. It is not the stand alone. I have had to challenge several appraisals because some are just plain LAZY to find information.

[speedingpenguin 19]

When I pull comps for a property I'll look at foreclosures/short sales but don't give much weight to them, unless it's a rehab deal I'm looking at.

 

If you're trying to pin a value to your property (or one you're gonna L/O) I'd just look at non-distressed sales from the last 4-6 months. The "sold" prices are what the houses have actually sold for even competing with short sales, REO's, etc., so IMO the non-distressed sales by themselves are a good measure when coming up with a value.

 

I posted my method for running comps the other day in another thread:

 

http://www.naked-investor.com/forums/index...ost&p=43555

[MichaelC 160]

Mike, you can't totally dismiss foreclosures and distressed sales when factoring values. There is no cut and dry formula to appraisals. If that were the case, there would never be discrepancies over the value of a particular property. You do your due diligence, make your argument a persuasive one, and have the sales data to back up your numbers.

[Jonathan RexfordFL 8]

Okay I am going to spend 2 more cents here.

 

I battle this every day with my short sale business. We BUY on DISTRESSED sales. We sell on NON Distressed Sales.

 

When an appraiser looks at a property, they will take it into consideration when looking at the area. It may even be in there remarks. But you have to be proactive with the appraiser. Just like when we meet the BPO agent for short sales we are proactive.

 

Here is what some appraisers may not do.

 

They may not call the agent that handle the sale that they are trying to comp.

 

WE DO!

 

They may not research LISTING HISTORY!

 

WE DO!

 

Again, take control of what your outcome is. Determine what you want to accomplish. I can pull distress comps just as non distress comps in most cases. But in some areas, that is all there is.

 

Okay... 2 cents gone.

[speedingpenguin 19]

Aren't most properties in Florida these days owned by the banks?

[MichaelC 160]

Aren't most properties in Florida these days owned by the banks?

Used to be. But now the banks are owned by the Fed.

[lhenley 8]

...and the "Fed" is us taxpayers.

 

Lynn (FL)

[<Steve> 82]

Let’s see if I got this straight:

 

Banks created bad paper via mortgages for individuals at above market values.

Banks are only required to have say 10% cash to back up the paper they make.

Banks front end:

Banks receive big bucks selling the paper back to the individuals & institutions.

Banks get in trouble for making bad mortgages and can no longer sell the paper.

Passive income:

Banks are the Federal Reserve and have government in their pocket as back up.

Banks business gets slow due to bad business practice, so the fed prints free money for the bank via tax payer debt.

Banks end profit:

Now Banks get the individual’s wealth via the foreclosure.

Banks take over the real estate market by setting prices below market value. Retail is dead.

Banks still make money as they only had a 10% investment originally anyway.

 

And the tax payer has nothing; only more debt than when they started.

[MichaelC 160]

...and the "Fed" is us taxpayers.

 

Lynn (FL)

Then that means we own the properties again! So how can banks foreclose on anyone? That's it! Mortgage payments are no longer required in this New World Economy. Enjoy, everyone!

 

 

Let’s see if I got this straight:

 

Banks created bad paper via mortgages for individuals at above market values.

Banks are only required to have say 10% cash to back up the paper they make.

Banks front end:

Banks receive big bucks selling the paper back to the individuals & institutions.

Banks get in trouble for making bad mortgages and can no longer sell the paper.

Passive income:

Banks are the Federal Reserve and have government in their pocket as back up.

Banks business gets slow due to bad business practice, so the fed prints free money for the bank via tax payer debt.

Banks end profit:

Now Banks get the individual’s wealth via the foreclosure.

Banks take over the real estate market by setting prices below market value. Retail is dead.

Banks still make money as they only had a 10% investment originally anyway.

 

And the tax payer has nothing; only more debt than when they started.

Steve, you got it. I think you need to replace Bernanke as the head of the Federal Reserve. Anyone in DC owe you any favors?

[<Steve> 82]

Steve, you got it. I think you need to replace Bernanke as the head of the Federal Reserve. Anyone in DC owe you any favors?

I don't know about that MC, but the local condo association wanted me to run for an officer position.