The comps used for appraisal may be changing

[Account Closed]

I just read an interesting article:

http://www.dsnews.com/articles/three-states-move-to-ban-foreclosure-sales-from-appraisal-values-2011-03-30

It seems that several states are moving to ban the use of foreclosure sales as comps for a home not purchased as a foreclosure. Not sure the rational that has been used to say that a home that was foreclosed on is comparable to a normal sale.

[Stan Jackson]

Quickly speaking, banks have been requesting different values since as early as 2007.

I've seen requests for Fair Market value, meaning not under duress such as a pre-foreclosure or REO. If the subjects' market is driven(more than 51%) by a certain sales type, then the valuator is required to use only comps of the majority. It's up to the agent or appraiser to explain why certain comps were used.

If the banks are going to force agents and appraisers to use ONLY fair market sales, then expanded search criteria will become the norm. Also, fair market values will have substantially higher days on market, thereby making it useless.