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  #61  
Old 04-23-2012, 06:08 PM
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Calvin the Airedale Calvin the Airedale is offline
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Quote:
Originally Posted by AlwaysLearning View Post
Your assumptions and opinions are in contrast with the lending reality outside of the GSE’s universe. Evidently, you refuse to leave the GSE’s universe.

A Federally Regulated Financial Institution (aka portfolio lender) would generally request a prospective market value opinion even when financing involves a proposed construction of a single family residence. I guess they interpret the guidelines differently than you do.

And this is not just my opinion. I do have such clients and have completed such prospective appraisals.
What do I know? I guess the 6 years I spent as the CA of the largest thrift in Ohio must have been just an honorary assignment. Meeting with regulators, auditors and such on topics of standards and compliance and managing a staff of 35 with a budget of $2.5m obviously adds up to not much experience in the "non GSE" universe.
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  #62  
Old 04-23-2012, 06:17 PM
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Look up obsequious, if necessary, Mr AlwaysLearning.

That's what I figured your original comment to be. Now, all doubt has been cast aside.

How the heck are Rio Lobo and Jgrant going to sift their way through this issue, with obsequious comments as a side show? Basically you had nothing to contribute.

Jgrant, I mean you no harm The reason I brought up the concept of a prospective valuation was because you mentioned that you would not consider adjusting a REO in a declining market, yet might consider it OK in a stable or increasing market.

Why would you treat an adjustment differently for a point value estimate scenario for MV of a REO depending upon the assumption that a market will continue to decline (or not) into the future?

Edit to add: In some segments of my market there is enough data to project a narrowing or widening gap between REO and non REO sales, all else equal. But, for mortgage lending purposes, I don't think we should try to dial things in so closely. It is a bit of an over promise

Is it your contention that a "condition of sale adjustment" is like a time adjustment? Not so.

I was trying to convince you that developing an adjustment for a comp in a point value estimate for a Fannie/Freddie/FHA appraisal should have nothing to do with one's conclusions about the market prices increasing or decreasing during the exposure period.

Last edited by JSmith43 : 04-23-2012 at 06:23 PM.
  #63  
Old 04-23-2012, 06:22 PM
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always learning, annoyingly obtuse...
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  #64  
Old 04-24-2012, 09:36 PM
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I made application to purchase Millie's Dead Horse Farm today .... from the looks of things ... dead horses are going to be in high demand for this subject.
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  #65  
Old 04-24-2012, 10:08 PM
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Just take your horses and beat it, PE
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  #66  
Old 04-25-2012, 01:31 AM
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JSmith,

thanks for the post. And we are limited on the board as we speak in generalities and can not address nuances the way we would in a face to face conversation.

RE, the MVO is on an effective date. Let's pick April 20, 2012. On April 20, we have 10 sales in an area, of which we pick 4 as comps the most competitive, like substitutes for the subject. We put them on the grid as sold comps. On eff date,
On April 20th, we also have listing and pending activity. Three listings are the most competitive substitutes, one with a pending contract, one just had price reduced. We grid the two listings as well, because the comps have sold, thus, on eff date, the buyer would be looking at the listings to purchase as substitutes for the subject. (principle of substitution)

The MVO defintion includes a well informed buyer.

Any well informed buyer is going to be aware of the listings. Sice the comps have sold, the properties the buyer would consider for purchase are the listings avail on the effective date.

Thus, listing activity is critical information. I always looked at listings , the days on market, and what is pending, etc, and included them in my analysis long before the MC form or clients started requiring them.

The fact that lenders now routinely require at least one listing be grided and most often two, and ask for pendings where possible, and that listings are part of the market data on MC forms show that the lenders recognize their importance as part of market data and activity.

The MV definition asks the most probable price our subject would bring in a presumed sale between a typically motivated buyer and seller who are well informed on the eff date. The comps are already sold. Thus, on the eff date, the well informed buyer would be looking at listings as the substitute properties for the subject.

In a declining market, if the model match listing is priced lower than your last sale, that should, in many cases be a basis for weighting your MVO on the lower end of value. The reverse is true in a rising market. In a rising market, with higher priced listings in pending contract and short marketing times, it would point to weighting the MVO on the higher end of value.

It would also shape, to me in my markets, if I were going to adjust a lower price REO sold comp up or not for market conditions.

I hope that explains why using listings as part of anyalsis is not providing a "prospective value", it is providing the MVO on eff date using the listing and pending trends as part of the market data available to the buyer and seller ( a well informed seller would also be aware of listing competition, and that would affect what offers he would accept or reject)

Last edited by J Grant : 04-25-2012 at 02:03 AM.
  #67  
Old 04-25-2012, 06:39 AM
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Is it your contention that a "condition of sale adjustment" is like a time adjustment? Not so.

A condition of sale adjustment is not like a time adjustment. However, it should be present in the same direction as a time adjustment, or direction of the market. If the market is declining, and you are considering making negative time adjustments, how do you justify making an upward adjustment for condition of sale of an REO, when even the regular sales are declining in value?

In a rising market, typically, REO prices start rising almost to the level of regular sales, or exceeds them . If REO prices still lag in a rising market, it might make sense to adjust them up in such a market, for example.


I include REO sales as comps only when they are direct competition to my subject. Because I spend a tremendous amount of time choosing the comps (which means considering and discarding many in the process), by the times the comps are chosen, even in declining markets, the REO comps are such good substitutes for my subject there is rarely much of a price difference, or condition of sale adjustment needed.
  #68  
Old 04-25-2012, 07:08 AM
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I was trying to convince you that developing an adjustment for a comp in a point value estimate for a Fannie/Freddie/FHA appraisal should have nothing to do with one's conclusions about the market prices increasing or decreasing during the exposure period.

Typically, property physical characteristic adjustments such as pool or view would not change in rising vs declining markets (though we might see buyers paying more for them in a rising market, less in a declining)

But market conditions would determine if one makes positive or negative time adjustments to comps, or decides to weight later sale vs earlier sale comps, as well as whether or not to make condition of sale adjustments.

Some appraisers don't see it that way, and "divorce" condition of sale adjustments from the market, making a generic decision to always adjust REO comps up, for example, no matter what market conditions are or what the data tells them.

Market conditions themselves are what is creating the presence of REO sales. So to then adjust them up, for the very market conditions that created them, might be a "double adjustment", when certain market conditions are present.

An appraiser first has to ask why there are a number of REO sales present in the subdivision they are appraising in.

The answer to that will reveal a great deal of context for the analysis, and shape how to evaluate market conditions and their impact on the subject.
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