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Assets Under And Pending Contract Case Study

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Assets Under or Pending Contract

When reviewing the population of 11 assets in “under or pending contract” status as of July 31, 2017, 5 of 11 had a variance (sales price compared to the initial list price) outside of what RMS believes is an acceptable range.

• 2 assets were under or pending contract for more than 15% below the initial list price. The sales price for the 2 under or pending contract assets ranged from 76.2% to 81.8% of the original list price. Both are under contract as a traditional sale.

During our weekly calls, Altisource acknowledges many of those with a significant variance had an initial asset value that was incorrect and they “chased the value” on the assets. RMS believes the underlying cause of the value …show more content…

Based on our observations and more importantly on the review of assets during our weekly calls with Altisource, RMS believes on many of these assets, the condition and/or location of the property is a primary driver behind not only the large reduction in list price, but ultimately a sales price that will be well below the initial list price, all of which contribute to extended days on market and an increase in carrying costs incurred by the Trust. We believe a contributor to this relates to the Altisource process where the “listing agent” may not always be local to the property and may not have not personally visited the asset to assess the condition and the location, has not driven by the comps and generally may not be familiar with the intricacies of different neighborhoods in the area.

RMS believes that while it is important to list an REO above the identified asset value, it is equally important to recognize when a list price is too high and to make appropriate and timely adjustments to avoid additional days on market and days in REO. Doing modest reductions, which is an Altisource philosophy, even when indicators (e.g., low offers, lack of offers, no showings) reflect a larger adjustment is needed, increases REO timelines and carrying costs. List price continues to be a

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