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Power of Sale

For residential appraisers, appraisal properties that have been placed under the Power of Sale may offer unexpected challenges and difficulties. Unless the appraiser is very specific in describing the objective of the assessment, the likelihood of a claim against your professional liability insurance fund increases significantly.

Why Do You Need Us?

At National Appraisals, our expert appraisers exercise caution while doing an assessment on a property that is in a troubled position (i.e., one that has been foreclosed on and is being offered for mortgage sale), since the appraiser must avoid undervaluing the property just because of the circumstance he or she is in.

Assuming that the lender requires a value for a quick sale, our appraisers clearly identify any differences between the property’s current market value if it were sold under normal market conditions and the value determined after considering any consideration given to accommodate an expedited sale.

Clients may sometimes request that an appraiser conduct an assessment in which an estimate of worth other than market value is required, such as:

  • An insurance value
  • Forced sale value
  • Investment value
  • Other similar value

Under these conditions, National Appraisals give both a description of the value being reported, as well as a statement stating that the reported value does not represent market value and an explanation of how it varies from the market value.

Power of Sale Value

In placing a “Power of Sale” value on a property that is less than the current market value and failing to qualify the difference clearly, an appraiser accomplishes two things:

  • Provides the lending institution with just cause to sell the property and get out of the messy foreclosure proceedings
  • Provides the lender with ammunition to file a claim against another appraiser who completed the original appraisal and failed to qualify the difference clearly

According to recent data, mortgagees are the source of almost half of all claims made against them. When it comes to the particular property seized by the lender, a power of sale appraisal may really be an indicator of the value at the time of foreclosure, which is defined as the date of foreclosure. In many cases, the lender does not want to be tied down to a property for an extended period of time and prefers a valuation at which the property may be sold fast.

At National Appraisals, our appraisers have expertise in working with such kinds of issues, and they address them all really fast. Therefore, before any further ado, you must contact National Appraisals in Ottawa and get your work done fast and efficiently.

When was the last time you heard someone say, “That was a forced sale, and the property is now worth 20 percent more?” This may or may not be true, depending on who you ask. In any case, until such ideas can be proven in the marketplace, one should use extreme caution while using them.

Just for the sake of conversation, let us suppose that this is correct and that it can be shown that a property transferred through the power of sale reflects a value that is 80 percent of the market value of similar properties.

Why would a lending institution sell something at a lower price than the market will bear? However, aside from the financial implications of having to secure and maintain the property for an extended period, there is also the stigma associated with having another defaulted loan on file, which may have caused headaches for everyone involved, from the collections department to the loan officer to the manager.

Quick & Fast Solutions

It is an uncomfortable situation that should be resolved as soon as possible. Therefore, you always need to have an appraisal company at hand. National Appraisals would be more than glad to help in a Power of Sale situation.

When the dust has settled, someone is going to demand their pound of flesh, not to mention their stolen loot. If an appraiser completes an appraisal under the direction of the lender for a value that will ensure a quick sale, and that appraisal does not clearly and specifically identify the relationship to market value, then we have provided the lender with sufficient evidence, at least in their eyes, that someone made a clerical error.

If a mortgagee has been stung, the original assessment is subjected to intense examination, with questions raised about everything from its measurement to its comparison with other transactions to the description of changes made to the subject property.

Whether the market has experienced a slump or whether the property has been unoccupied for a long period of time and has deteriorated quickly, none of this is relevant. In terms of value, the lender has two reports that are at odds with one another, and this is sufficient grounds for taking action.

Higher than Normal Value

A higher than usual probability exists that an appraisal will be sought on a property that has been taken back as a consequence of foreclosure and that this appraisal will be utilized if an insurance claim is filed.

It is essential to identify and explicitly deal with two things to prevent lawsuits relating to appraisals for “power of sale” transactions. At National Appraisals, our experts ensure the following conditions:

  • Our appraiser is very thorough in characterizing the state of the property on the day of the examination, especially in identifying any components that are showing signs of severe deterioration or decay.
  • The appraiser is extremely explicit about the objective of the appraisal if it is to be used for a value other than market value. The appraiser states this clearly and explains the difference between the two values.
  • The Appraiser provides a discounted value only if it can be substantiated by other evidence.

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