BPO and Neighborhood

When doing a BPO and using the comparison approach the neighborhood is the point of strategic decision making. It is at this point where the evaluator decides what the focal point should be concerning houses for sale. This is the point that make local real estate people more valuable than long distance or computer evaluation. How does one decide that a particular home is an anomaly. If the neighborhood is all new homes then that is a simple exlanation but If the neighborhood or part of the neighborhood is going through the four phases of the neighborhood life cycle then a local realtor or appraiser is definitely needed.

The four neighborhood life cyles are growth, stability/equilibrium, decline and revitalization as the bpo should state. Each one of these cycles functions as the following in terms of neighborhood’s marketplace:

The first stage that a new neighborhood goes through is growth. The value of housing during this cycle is related to development activity, but there are exceptions such when a individual property owner builds in a undeveloped area. This phenomenon is related to the concept of demand and supply which the bpo should indicate.

The second cycle is stability/equilibrium is the cycle where the neighborhood matures to the point where there is little supply. This is the point where you get price stability in regards to real estate prices and the prices seldom decrease, but don’t forget arms length transactions which mainly explains the exceptions.

The third cycle is decline. This decline cycle occurs when demand for real estate declines and this is observed through deterioration or decay of properties such as poor maintenance. This normally occurs when something interferes with the industrial base that is directly related to the neighborhood such as high unemployment. High unemployment may cause property owners to attract renters instead of owners for properties and there is no money set aside for the cost of deferred maintenance which leads to no property maintenance. Worse is when the properties are vacant for long periods of time because of foreclosure. The bpo should indicate price declines based upon this cycle of decline

The fourth cycle is revitalization and this occurs when prices rise again. This occurs because the property becomes in demand again because people spin more money making repairs to the properties.

Integrated Asset Services (IAS REO) http://www.iasreo.com Integrated Property Source http://www.iprops.com/ Integrated Real Estate Processing http://www.irepvm.com JEM REO Resources, Inc. http://jemreoresources.com/new-brokers/index.php Jennings State Bank http://www.jenningsbank.com Keystone Asset Management http://www.keystonebest.com Kondaur Capital Corp. http://www.kondaur.com/ LAMCO http://www.lendersreo.com LB Market Evaluations http://www.lbmarketevaluations.com Lender Recovery http://www.lenderrecovery.com/valuation.htm Lighthouse Real Estate Solutions http://www.lrescorp.com LOGS Network http://www.logs.com/services/reo_services/reo_broker.html Main Street Valuations https://www.mainstreetval.com/Application.aspx Market to Market http://www.defaultresource.com/mark-to-market/ MCB http://www.mcbreo.com/opportunities.html MD Webb & Associates, Inc. http://www.mdwebbinc.com Millenia Asset Management http://2ndlienrecovery.com/asp/site/vendors/jointeam/index.asp Mortgage Contracting Services http://www.mcs360.com/vendors.aspx National Asset Management Corp. http://www.namg.com National Asset Management Group http://www.nationsreo.com/becomebroker.cfm National Creditors http://www.nationalcreditors.com/services/fieldcalls.html National default Servicing, LLC http://www.ndsreo.com/register/