SHOULD FORECLOSURES BE USED WHEN DOING APPRAISALS?

By
Real Estate Agent with Century 21 New Millennium MD

Here is an important question.  SHOULD FORECLOSURES BE USED WHEN DOING APPRAISALS? 

As I shared the news of the latest Market Analysis for a homeowner today it was very upsetting.  There were two homes sold as Foreclosures in her neighborhood.   Guessing what the Appraiser will , or won't, use in his Appraisal will impact her decisions.

I decided to search online to see what was happening in legislation. Here is one blog I found posted on the National Association of Realtors® site.  This post concerning NOT using Foreclosures in Appraisals should start you thinking. 

What is your opinion?

Whether Real Estate Agents, or general public, we should think about our opinion and what we can DO.  Perhaps contacting our Legislators and letting them know our opinion on NOT using Foreclosures in Appraisals.  This action could save neighborhoods and neighbors.  Yours and Mine! 

I am Margaret C. Taylor St Mary's County MD REALTOR®.

I am certified with the SFR, Short Sale and Foreclosure Resource Certification, from the National Association of Realtors and CDRS, Certified Default Resolution Specialist Certification, from America's Home Rescue. I am qualified to help you buy or sell your home.

CALL or TEXT 301 481 8407 for a FREE Consultation

I am a Century 21 New Millennium Real Estate Agent, St Mary's, MD

I welcome your REFERRALS. Ask for MARGARET C.

Think about it.  SHOULD FORECLOSURES BE USED WHEN DOING APPRAISALS?  And act on it!

This blog is for informational purposes only and is not intended as legal or tax advice. An Attorney, CPA or other specialist should be consulted for specific needs.

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Comments (7)

Suzanne Martin
Suzanne Martin, Broker - Laguna Niguel, CA
Your South Orange County/North San Diego Broker

Hi...interesting.  Every market may be a little different.  Using REO's and short sales bring housing prices down.  Some markets may not be as high as others.  I wish we didn't have to use them, but in most cases, I think we have to. 

Jun 26, 2011 04:09 PM
P.J. Virgilio Jr., Realtor 408-568-6578 Selling homes in the Greater San Jose area and South through San Martin, Gilroy
Keller Williams Realty Silicon Valley - Gilroy, CA
San Juan Bautista and Hollister as well!

Margaret,

The appraisal is to represent the current market value.... how can you not use them? I would have another opinion on adjustments being made accordingly for foreclosed properties though.

 Just my opinion.

Patrick

Jun 26, 2011 04:10 PM
Tim Bradley
Contour Investment Properties - Jackson Hole, WY
Commercial Real Estate Expert in Jackson Hole, WY

Absolutely, they should be considered. If foreclosures make up over half the market, they ARE the market. If they are only 10% of the market, they are just another influence...

Jun 26, 2011 04:39 PM
Anonymous
Anonymous

Thank you for your comments.  I did use them which is what made it a difficult conversation with my Homeowner.  It looks like its down to location again.  I agree with Tim saying the influence that Foreclosures have should be dependent on the number in the market, along with  appropriate adjustments being made, as suggeseted by Patrick.  Finally the condition of the property needs to be considered. These considerations would make the impact less devastating to the Market and the Homeowner.  Margaret C.

Jun 27, 2011 01:36 AM
#4
Margaret C. Taylor
Century 21 New Millennium MD - Mechanicsville, MD
St Marys/Calvert/Charles MD Real Estate Agent

Sorry the last comment was mine.  I forgot to log in.  Margaret C.

Jun 27, 2011 01:38 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Should they or should they not?  The fact in our area if they exist they are being used.

Jun 27, 2011 05:02 AM
Richard Glesser
North Country Appraisal Services - Gaylord, MI

While foreclosures influence the market and, as Tim stated, sometimes are the market, I have always considered the market as which homes compete with the subject.  A buyer looking at a well maintained home is not interested in a foreclosed home needing substantial repairs.  REO properties appeal to investors who have the ready cash to make necessary repairs.  Finally, REO sales are not true arm's length transactions in that the buyer and seller are not acting without duress since the seller is merely interested in liquidation even at loss.

Jun 30, 2011 02:00 AM