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Value is the result of what anyone will pay to acquire the property.(maybe not). I believe a property listed at a certain price and does not sell becomes an overpriced listing. Therfore, seller is reducing the price unitil sold and we have the value. Value is linked to price through the mecanism of exchange. Part of this process is the BPO we are doing and which determine the value based on the best similar properties recently sold and presently listed . We realize this property is suddenly overpriced due to the extended time on the market and remains unsold. A major price reduction finally triggers a sale and we say the property is sold at its value. Really! In many case it has been done nothing to market this property other than limited information on MLSand a waiting period to apply a price reduction. In my opinion, anything can be sold with price reduction and that does not mean the sold price is a real value. Does a 18th century painting paid $ 100 in a garage sale has a real value of $ 100? Let see the sold price later on in an appropriate auction! What I am trying to say it is easy to say the listing price is overpriced while very limited marketing has been done to try to sell this property. This applies to many REO properties (at least in my area) and it is obvious that price reduction is an easy way to sell and generates a declining market since the subject property will be thereafter used as comparable for future transactions. Then, we are dealing with financial industry to raise capital due to the financial crisis. May be one way to raise capital will be at first to sell and try to sell the defaulted asset at their just value.

Alain Thillois.

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Comment by Steve Adkins on January 26, 2011 at 10:28am

Very good topic Alain! I ran into this very thing this week while doing a BPO.


The BPO company sent back a BPO requesting that I change comps because the bank client requested. That thought my valuation was too high at $40,000. The bank even named what properties they wanted, which made me a little suspicious. When I finally found the comps they wanted in the MLS, this listing agent on these properties was the listing agent for the subject property so I'm guessing it's the same bank. The listings were in the County, had no tax ID's, no square footage and no lot size. No interior pictures either. And the all three has been on the market with this agent for a minimum of 450 days, but they sold.


You know, even a blind rabbit finds a carrot every now and then. These properties have had so many price cuts it wasn't funny. I guess when no one can find the listing, no one makes an offer? Which leads to more price cuts. Oh, did I say that the listings said NO Selling Agent Commission? Haha! No wonder it took a year and a half to sell!


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