Real estate news and features

Debbie Huber,SRA of Huber Appraisal and Home Pride Insections in Las Vegas is today’s featured guest blogger.� Debbie has been appraising residential homes in Las Vegas for over 20 years and holds the SRA designation (Senior Residential Appraiser).� She is also a Past President of the Appraisal Commission for the State of Nevada.

Should appraisers use short sales or bank owned properties/repossessions as comparable sales or listings in their analyses? (Repo??�s or bank owned properties are also known as REO??�s.)� The best response to this question is that it depends on each particular subject property??�s subdivision or market area, and what the typical types of sales are in that particular subdivision and/or area. Sales and listing data must be analyzed sufficiently to determine which properties are not only the most similar to the subject in features, amenities, quality and location, but also those that represent ???normal??? terms of sale by typically motivated parties for the specific market area.

At the time of writing this article (the third quarter of 2008), unless I am appraising a bank owned property or a short sale, I try not to use short sales as my actual comparable sales in completing an appraisal report. I believe that short sales may actually be a third, separate type of market, due to the difficulties of getting through the short sale process. The motivations of the involved parties may not reflect typical sellers??� (or buyers) actions in their markets, and therefore, lower selling prices are often the result. I don??�t believe it is appropriate to use short sales as the actual comparable sales in an appraisal unless they are considered typical for that specific subdivision. If that is the case, then it is essential to utilize them. Keep in mind that appraisers must always analyze all market data pertinent to each subject property. While I must consider all short sales that are relative to a subject property, I may not necessarily use them as my comparable properties when completing the appraisal and report. It is important to discuss specific comparable sales in the appraisal report that may be considered pertinent, however, even if they are not identified as actual comparable properties in the report. This allows the client or user of the report to understand the logic of the appraiser and therefore, lessens the possibility that the report could be considered misleading in any way.

REO??�s or bank owned properties that have sold also must be considered. The same logic applies to them. If they appear to be typical sales for a subject??�s area, (which now seems to be the case in most areas) than they should be used as comparable properties. I have utilized bank owned properties (REO??�s) as comparable sales only when I have determined that they are representative of the
neighborhood I am analyzing. In analyzing market data for any assignment, the more data one can analyze, a more accurate opinion of true market value should result. While Fannie Mae guidelines require a minimum of three comparable sales on the appraisal reports, it is important for appraisers to analyze more than just three sales. Only then can an appropriate determination be made which three (or more) properties are really the most representative of the subject??�s market and therefore should be put on the appraisal report(s).

Listings, pending and contingent sales should always be considered, also, even if they may not appear in the appraisal report. Short sales and REO??�s, if common in an area, may indicate the current competition in a subject??�s neighborhood and could assist the appraiser to make the final determination of the opinion of market value. Many financial institutions are now requiring that appraisers include one or two current listings on all appraisal reports completed in Clark County.

Contact Debbie:

Huber Appraisal, please call (702) 243-3256 or email: debbie@huberappraisal.com� �� �� �� �� �� �� �� �

Home Pride Inspections, please call (702) 363-1681 m.harrison@homeprideinspections.com� �� �

janobrien.com

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