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Time Adjustment: Based On Contract Dates

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by MrLA, Aug 18, 2009.

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  1. MrLA

    MrLA Sophomore Member

    0
    May 12, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Louisiana
    I just talked to Robert Murphy from fannie mae, the new announcment SAYS time adjustments is based on CONTRACT DATES OR THE MEETING OF THE MINDS.

    I have confirmed this on the announcment 09-19. PAGE 8 NEAR THE BOTTOM

    THE TERMS "DATE OF SALE" WAS USED IN LIEU OF "CONTRACT DATE" THE CORRECT TERMINOLOGY AS STATED IN THE SELLING GUIDE IS "CONTRACT DATE".

    I DON'T AGREE WITH THIS, BUT THIS IS HOW IT IS. I JUST BANGED HEADS WITH B OF A WITH THIS, AND I LOST.

    OH WELL, ALL THOSE SHORT SALES THAT HAVE BEEN IN CONTRACT FOR A YEAR WILL BE BASED ON CONTRACT DATES. AGENTS WILL NOT TELL YOU WHEN THE MEETING OF THE MINDS HAPPENED. SO WHAT'S GOING TO HAPPEN IS LESS ACCURATE APPRAISALS BEING PRODUCED.
     
  2. Joyce Potts

    Joyce Potts Elite Member

    5
    Feb 6, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Stop trying to catagorize the meaning of every contract or closing date into one basket and think of it terms of what makes sense on every piece of market data you're being ask to ANALYZE.

    Sometimes the meeting of the meeting of minds or contract date is far more reflective of the value AT THAT TIME. How about those contracts signed with builder/developers for a much higher price and when it came closing time the values had declined with the buyers faced with either:

    1 - Continue to close paying more than they knew the property to be worth at the time with a HIGH sale going in the public records that looks more current because it's based on the closing date.

    or

    2 - Forfeit the security deposit which is exactly why many proceed to closing over a contract that was signed when market conditions were signficantly different. See how this can skew the market with regard to 'closing dates'?

    THE OLD RULES DON'T APPLY ANYMORE. That includes relying on closed sales in the public records without further scrutiny.

    Solution to the problem:

    1 - Record the HUD-1's with every deed for every FRT, and

    2 - Establish an e-vault with very FRT having a Federal ID number that is assigned to the loan documentation, appraisal(s), contracts with addendums, HUD-1's, etc., available to all regulatory and law enforcement entity.

    It's just that simple.
     
    Last edited: Aug 18, 2009
  3. MrLA

    MrLA Sophomore Member

    0
    May 12, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Louisiana
    "meeting of the minds"? Food for thought. Where I appraise, agents will not tell you when the meeting of the minds were. So the only choice I have is to base it of the contract dates. The contract dates are vague too, cause agents will not usually disclose that to you also. So, you have to assume that the mls is correct. This is going to be fun.
     
  4. Ken B

    Ken B Elite Member

    81
    Feb 18, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    The contract date would be the date it is signed by all parties, not the date it is first created. If a contract was initiated by a purchaser 8 months ago and the lender signed the contract last week, the date of the contract is last week. There should not be a significant delay between the date the lender signed and the date of closing. Especially since these are often cash transactions. When it comes to veryifying the date the contract is signed in the MLS, the date the status changes from "contingent" to "pending" would be a good indicator, especially if there is a lengthy period between the date the listing went contingent and the date it went pending.

    (Substitute whatever terminology your MLS uses for "contingent" and "pending", as needed.)
     
  5. David Dietz

    David Dietz Member

    0
    Oct 30, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Keep in mind that these are guidelines and are not concrete must do orders. If your market for one reason or another does not allow for you to obtain a contract date with a reasonable amount of certainty or credibility you simply state that fact base your adjustment on the sale date and move on.

    Things like this are done in non-disclosure states all the time. The guidelines can not always be followed to the letter in every appraisal. all one can do is try your best and when you can not comply explain what you have done to attempt to comply and move on.
     
  6. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    223
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    Pray tell when many MLS's for the most part are hiding the info, the contracts are rarely available on comps, and this information is purposeless and meaningless...what the *&^% does it matter? Short of some sale delayed by months and months, in my area we are usually talking 15 days to 30 days. Rarely 60..big deal. Small changes in market over short periods are simply not visible in a statistically meaningful way.
     
  7. CANative

    CANative Elite Member

    121
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Best response and nothing else matters.
     
  8. Mike Garrett RAA

    Mike Garrett RAA Elite Member

    13
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    My MLS reports contract date. Common sense says that is the date the price is established and any time adjustment should be from that date.
     
  9. PropertyEconomics

    PropertyEconomics Elite Member

    0
    Jun 19, 2007
    Professional Status:
    Certified General Appraiser
    State:
    New Mexico

    Mike .. I am not disagreeing with you but what happens when the appraised value falls $5,000 below the sales price, the contract is adjusted five days prior to closing, and the date of contract is not revised within MLS? I am seeing this happen an awful lot in my market and I would bet its happening in others as well.

    I realize Fannie guidelines say use the "date of sale", however, I would also suggest that as long as the comparables are measured in the same manner (ie contract date or closing date) and applied to either the contract date of the subject (if a sale) or the effective date of appraisal (if a refinance) there really will not be much difference in the outcome of the analysis.

    I think the key is to be consistent.

    Thanks for your thoughts.
     
  10. Mike Garrett RAA

    Mike Garrett RAA Elite Member

    13
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    I concur...be consistent. Either method can be supported.
     
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