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Again, MLS Data Or Due Diligence

Discussion in 'General Appraisal Discussion' started by Pamela Crowley (Florida), Dec 21, 2004.

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  1. Pamela Crowley (Florida)

    Pamela Crowley (Florida) Elite Member

    4
    Jan 13, 2002
    Professional Status:
    Retired Appraiser
    State:
    Florida
    Here is a copy of what I'm writing in a Review:

    • One-Unit Residential Appraisal Field Review Report:

    1- Prior Sales and/or listings of subject and sales used as comparables in Original Appraisal Report being Reviewed:

    No prior sales or MLS data of any kind found for subject. It appears the Appraiser did not have access to or utilized MLS data. The sales used as comparables have data in the local NEFAR MLS that is not used in the Appraisal Report.

    Prior transfer of Sale #1 was a builder purchase of an older house on a double lot that was split (*** Xxxxxxx Ave, Co ID #####), a new house was built on part of that parcel and sold with a new address (*** Xxxx St., Deed recorded in Clay Co OR ###/###). No other relevant prior transfers of this property were found since 1995.

    Prior transfer of Sale #2 was a builder purchase of multiple lots with an older house on them (OR ###/###) - there is an additional prior transfer on 12/01/2003 using a Quit Claim Deed that was between relatives. Next newest prior transfer was 1989, again a Quit Claim Deed between relatives.

    There are no prior transfers within one year found for Sale #3. Latest prior sale was 12/2000 when it was sold as new construction for $83,500.


    2- Accuracy of data in Original Appraisal Report being Reviewed:

    NEFAR MLS data was/is available for all sales used as comparables, but does not match the data in the Appraisal Report as the public records data has not yet been updated with the correct information. Win2Data is a compilation by a second party of the County Tax Records and is not truly considered a second source of information for real estate properties and/or transactions. If only the County Tax and Recordings Records and Win2Data (or any other second party source of public records) is used, there is no true second source of verification. MLS data in this market area is considered necessary to competently complete a residential appraisal and serves as a second source of property and sale data outside of contacting either the seller or the buyer of a property to be used as a comparable sale. As the majority of the sales in this market area are handled by a Realtor, MLS data, along with being able to call any Realtors involved in any of these deals, is typically considered a necessary part of the due diligence required to produce a competent residential appraisal and report that is not misleading.

    Sale #1: MLS Listing ####: Listed for $90,900 on 01/01/2004 by **** ***** of XXXX, ####. Shows a sale pending the same day, 01/01/2004, listing data shows a proposed construction new house that was finished and closed on 05/11/2004 for $90,900 with an 80% Conventional 1st mortgage. MLS data shows this newly built house as frame construction with vinyl siding, 1,238 GLA, 5 Rooms, 3 Bedrooms, 2 Bathrooms, 2 car attached garage. The site is 67' x 100' and was split off from the larger parcel that included an older small house that fronts on ### Xxxxx Ave. See Clay Co. Deed, OR ###/###. Prior sale of this property, Clay Co. PID ###, was 10/13/03 for $45,000; buyer was a local builder that split this parcel and built a new house now addressed as #### Xxxxxx St and left the older house on a now smaller lot at ### Xxxxx Ave.

    Sale #2: MLS Listing ###: Listed for $99,000 on 10/01/2003 by XXX of XXX, ### Shows a sale pending on 01/04/2004, listing data shows a proposed construction new house that was finished and closed on 05/27/2004 for $90,000 with a 92.4% "Rural Housing" 1st mortgage and a $10,000 "SHIP" 2nd mortgage. MLS data shows this newly built house as frame construction, 1,369 GLA, 6 Rooms, 4 Bedrooms, 2 Bathrooms, 2 car attached garage; site is 52.75' x 132' = 7,623 SF. See Clay Co. Deed, OR ###/###. A builder split this parcel from a prior purchase of multiple lots that included an older house that was not part of this sale of this new house. Original parcel Clay Co. PID ###.

    Sale #3: MLS Listing ###: Listed for $99,999 on 03/30/2004 by XXXX of XXX, ###. Shows a sale pending on 05/20/2004, closed on 05/28/2004 for $104,000 with an 80% Conventional 1st and a 20% Conventional 2nd mortgage. MLS data shows this house as frame construction, 1,329 GLA, 5 Rooms, 3 Bedrooms, 2 Bathrooms, 2 car attached garage. There are very likely seller concessions that would need to be addressed due to the difference in the listed price to the selling price.

    Since there are sales in the City of XXX that would be much more representative of the subject in age, size and amenities, it is the Review Appraiser's Opinion that none of the sales used as comparables in the Appraisal Report being reviewed are appropriate. The information regarding sales #1 and #2 is almost all incorrect which appears to be due to not using local MLS data and not verifying the information. When driving by to take a picture of these properties, it is readily obvious that sales #1 and #2 are not 54 year old structures and are far superior to the subject.

    The original Appraisal Report appears to have enough errors to be considered misleading and in violation of multiple USPAP Standards and Ethics Rules. The Review Appraiser strongly suggests the Client send a copy of the Original Appraisal Report and this Review Appraisal Report to the State of Florida Real Estate Appraisal Board for further review.


    Subject is a 27 yr old house of 1056 GLA!!!

    IMO, if MLS is used for the majority of the residential sales in a market area, it is necessary to belong to the MLS system for the area you are appraising in.

    Since the name of the original appraiser is blacked out, I don't know where that appraiser is actually from geographically. My guess is that this is a Certified Appraiser that sent a trainee out do this appraisal in an area where neither that Certified nor the trainee belongs. It's beyond my imagination that any Certified Appraiser, and there was only 1 signature on the report with no mention of anyone else, would do an appraisal like this one. This is a prime example of why NOT to appraise outside of your geographical area without taking the time to do ALL of the due diligence necessary to MAKE yourself geographically competent - and that would include talking to the local Realtors.

    I will be trying to find out if the client does send this in to the FREAB. If they don't want to, I will. It will be a little more difficult for the investigator to find out who the original appraiser is, but they can.
     
  2. Ray Miller

    Ray Miller Elite Member

    0
    Feb 20, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Wisconsin
    Pam,

    See that kind of thing out here on reviews all the time.

    They have access to the Madison SCWMLS and WIWisconsinMLS that over lap each other. But in many case not that much. Because there are two additional MLS Systems that sit right in the middle of both and have many of the listings. Most of the realtors and real estate offices below to one and maybe two, but not all four nor the ones in IL, IA and Mn. So they are always missing a great deal of information.

    Most of the time I needed to use at least two systems to get correct comparables sales, If not three or four systems. That is why I belong to 8 MLS systems. Its not by choice.

    Yet when doing reviews, they are trying to put it together with just one system.
     
  3. jeff samolinski

    jeff samolinski Senior Member

    0
    Apr 18, 2003
    Skippy does all areas whether he/she has the data or not!!!!!!!!!!!
     
  4. Nancy Wyatt

    Nancy Wyatt Senior Member

    0
    Nov 21, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    Pam-

    The review companies I work for would probably make me take this out. I have even been asked to remove words such as misleading. Its unfortunate. Through the years, I have learned to craft things in such a way to avoid any of these comments but to get the point across.

    The companies I work for simply want the facts regarding the appraisal report. Maybe I'll try to start adding these comments again and see what happens.
     
  5. Otis Key

    Otis Key Elite Member

    0
    May 15, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    Nancy - I see what you're saying and understand it well but if, when you, Pam or me, you quote USPAP SR1-1 (B)( c) then there is no way that they can request such a thing and honestly expect any of us who do reviews to abide by the request. We, as reviewer, are also bound by USPAP and therefore a request to ignore or not state a finding which is in violation of USPAP is as much a request to violate USPAP as the person who prepared the original piece of paper.

     
  6. Pamela Crowley (Florida)

    Pamela Crowley (Florida) Elite Member

    4
    Jan 13, 2002
    Professional Status:
    Retired Appraiser
    State:
    Florida
    Thanks Nancy. I'm thinking about it since I haven't sent this in yet. Just finishing up the little details and double checking it.

    Ray, there are areas here where the MLS systems overlap, but this is not one of them. There is only 1 for this little city.

    Just read your post Otis. It's staying in.
     
  7. Mister Ed

    Mister Ed Senior Member

    0
    Jan 24, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    Georgia
    Pamela,

    If this one is the one you sooke about in GCS last week, then this is a perfect example of why I dont take any assignments there. My knowledge of GCS is minimal at best. I have turned down many assignments that I did not feel geographical competency up in Jax even thought that is where I was raised because I did not know enough about the area to really do the right job. My commission off the fee versus the potential for writing a report similar to the one you are reviewing are NOT worth the hassles to me.

    -ed-
     
  8. Randy Beigh

    Randy Beigh Senior Member

    0
    Jan 16, 2002
    Pam

    I agree with Nancy. The above sentence is also subjective and confrontational and should be changed or eliminated.

    I assume Nancy has been dealing with Max Letendre based on her comments. His method of doing reviews makes the reviews much less subjective and confrontational and will, virtually, wipeout any rebuttal, because you just stick to the facts.

    The above sentence adds nothing to your review, but does open the door for the rebuttal.

    I assume you are providing the lender with gridded sales you think should have been used.

    You have provided evidence to the lender that the appraisal is false and misleading and have done a complete and thorough job. Now, you just want to make sure it doesn't fly back in your face.
     
  9. Nancy Wyatt

    Nancy Wyatt Senior Member

    0
    Nov 21, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    Otis and Pam-

    Just to clarify-The reviews companies I do work for feel that these violations are for the client to determine. We are just there to report facts. Remember we are reviewing the report and are not the USPAP police.

    The purpose of the appraisal review is to verify the accuracy of the data and conclusions and to determine the reasonableness of the value opinion of the report under review.

    We always have the option of sending the report to the state ourselves.

    I also want to expand on the conclusion but after having my hand slapped by each review client for this, I don't.


    Randy-

    Who is Max Letendre? Maybe I need to contact them.
     
  10. Nancy Wyatt

    Nancy Wyatt Senior Member

    0
    Nov 21, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    Pam-

    If you do send your comments as they are, let me know if you get "feedback" from your client. I'll be interested to know.
     
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