What the bifurcation is going on too?

Continued from the previous post

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In the end I was quite comfortable that the market value coincided with the contract price.

In my research I found that buyers were paying premiums for owner sales and in many cases paying more for an older and smaller improvement when larger and newer homes were available due to foreclosure.  The reasoning came to greater perceived risk when buying a bank owned home.  Banks often provide few to no assurrances or warrantees regarding the land, improvements and title.  Buyers are on their own.

This market prefernce resulted in two sub-markets among properties that otherwise appear to be competitive.  The nicer and larger bank owned properties were not viewed as true substitutes.  They sell at a significant discount that better reflects liquidation value rather market value.  Thus, making an upwards condition of sale adjustment to the bank owned sales was appropriate.

I have to admit it was fun to see this market nuance as it ultimately provided the support for the subjects purchase price. 

But as it goes no good deed goes unpunished.  In spite of the purchase price being supported, the underwriter hated the report due to the large adjustments used to account for the market differences and called to have a new appraisal performed. 

Cheers! =)