What type of transaction is considered an original foreclosure transaction between lender and borrower?

An original foreclosure transaction refers specifically to the situation where a lender takes back the property from a borrower due to default on a loan. This scenario is distinct from other types of real estate transactions because it does not involve the voluntary participation of both parties in a sale or transfer.

In a disqualified sale for appraisal purposes, transactions arising from foreclosures are typically not treated as "regular" market transactions because they often occur under pressure, with the borrower not voluntarily selling the asset and usually at a lower price than in a typical market scenario. Therefore, these transactions do not provide a reliable basis for determining market value, making them disqualified from conventional appraisal methods.

Regular market sales are characterized by willing buyers and sellers engaging in a transaction under normal market conditions, which is not the case in a foreclosure scenario. Similarly, a voluntary sale involves the consensual transfer of property between parties, which again does not align with the nature of a foreclosure transaction where the transfer is often compelled by default. Existing lease transfers do not pertain to the original foreclosure context either, as they focus on the leasing arrangements of properties rather than the transfer of ownership due to loan default.

Thus, understanding the nuances of how foreclosure transactions operate within the real estate market clarifies why they