With the bubble bursting some eight years ago now, I would think most appraisers have had the pleasure of completing REO appraisals for their clients. Yet the disparity in the basic knowledge base of appraisers in this area is very surprising to me. In today’s market it is often difficult to write up a report without running across an REO sale in your farm list. However, I routinely run into appraisers that have never completed even one REO appraisal. On the other hand there are some appraisers that know nothing but REO appraisals. But are they doing them correctly is the key question?
Recently I’ve come across more and more REO appraisals that are not completed properly. Many appraisers are only utilizing comparables that are in poor condition like the subject currently is but do not provide a comp in Average to Good condition to have support for your subject to value after repairs have been completed. Having at least one closed and one active comp that supports your ‘Subject To’ value is very important so that you can support the ‘Subject To’ value within your report. I have found that appraisers also do not seem to either pay attention or understand the market client imposed market time as it relates to the current market time. If your current marketing time is at 120 days and your client has imposed say 60 days… Your values are not likely to be the same. And do you know how to extract it from your market?
Some of you reading this may be saying Duh this is common sense but not everyone thinks so and they may not be as smart as you. Take a class, brush up on your skills, help out your fellow appraiser. But do not accept assignments if you are not clear on what you are doing.