The term “REO” is industry jargon meaning “Real Estate Owned”. This generally means real estate whose ownership has reverted back to the lien holder. The financial institutions currently servicing the loan typically request the vast majority of REO appraisals. They now have collateral on the books that needs to be disposed of. In most REO appraisal requests, we are asked to provide three or more values. The lender typically is interested in the “as is” value of the home as it sits at the present time. They are also interested in the cost of any needed repairs and the value of the property “as if repaired”. Some clients request a quick sale value as well as a fair market value.
The complexity of the values associated with REO appraisals requires significant skill and market knowledge by the appraiser. Additionally, REO appraisals may present some rather unique access challenges. Most of the time REO properties have been abandoned by the owners and are now vacant. Since they are often un-occupied, some of these properties have been vandalized and may be hazardous to enter. Some are no longer locked and secured. A few, particularly in the winter, have picked up some “un-authorized occupants”, both human and otherwise. In any case, the REO appraiser must be ready for almost anything when making his site visit.
Oftentimes, we asked to perform “pre-foreclosure” appraisals. These appraisals present special challenges, as the properties are generally occupied and the property owners or tenant may be unwilling to allow an appraiser access to the subject property. In these instances, we can perform an “Exterior Only” appraisal, providing you with the information necessary to make reasonable property disposition or work out decisions.