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Old 08-14-2007, 04:59 PM
Tim Hicks (Texas)'s Avatar
Tim Hicks (Texas) Tim Hicks (Texas) is offline
 
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Default Predominant age and value?

I review appraisals all the time. It amazes me how often the predominant age is exactly the age of the subject and the predominant value is always the value of the subject property. It doesn't matter if it is the smallest home in the subdivision or the largest, it is the predominant value.

Does anybody read Fannie Mae guidelines? The forms were developed by Fannie Mae.

Quote:
XI, 403.06: Age Range and Predominant Age (06/30/02)
The appraiser must indicate the age range and predominant age of properties in the subject neighborhood. The age range should reflect the oldest and newest ages for similar types of residential properties (one-family properties, two-family to four-family properties, condominium units, or cooperative units) and, in some cases, for competing properties (one-family properties when the property being appraised is a two-family to four-family property or a condominium unit, or condominium units when the property being appraised is a cooperative unit.) However, isolated high and low extremes should be excluded from the range. The predominant age is the one that is the most common or most frequently found in the neighborhood. The appraiser may state the predominant age as a single figure or as a range (when that is more appropriate). The appraiser should select independently the properties that he or she uses to represent the age range and predominant age, rather than merely relying on the same properties he or she used to illustrate the price range and predominant price.
The age of a property should be within the general age range of the neighborhood. Normally, neighborhoods are developed over a relatively narrow span of time so that most dwelling units will fall within a particular age range. A property that has an age outside of the general age range must receive special consideration. Unless there is strong evidence of long-term neighborhood stability, a new dwelling in an old neighborhood will carry some marginal risk. Conversely, an old dwelling in a newly developed area is generally acceptable if renovation will result in its conforming to the neighborhood.
Quote:
XI, 403.05: Price Range and Predominant Price (06/30/02)
The appraiser must indicate the price range and predominant price of properties in the subject neighborhood. The price range must reflect high and low prevailing prices for residential properties that are comparable to the property being appraised (one-family properties, two-family to four-family properties, condominium units, or cooperative units) and, in some cases, for competing properties (one-family properties when the property being appraised is a two-family to four-family property or a condominium unit, or condominium units when the property being appraised is a cooperative unit). Isolated high and low extremes should be excluded from the range, which means that the predominant price will be that which is the most common or most frequently found in the neighborhood. The appraiser may state the predominant price as a single figure or as a range (if that is more appropriate).
When the subject property has a sales price (or value) that exceeds the upper price range, the property is considered as an "over-improvement" for the neighborhood. The property is considered as an "under-improvement" if its sales price (or value) is less than the lower price range. If the subject property is an over-improvement, the mortgage terms generally should be more conservative because the property may not be acceptable to typical purchasers. The appraiser must explain why the property is an over-improvement or under-improvement and comment on the adjustments that were made in the "sales comparison analysis" adjustment grid to reflect that condition.
The lender should consider whether a property in an urban area is among those being renovated. Since demand for this type of property can be strong, the property should not be regarded as over-improved if there is a strong market interest, which is indicated by the existence of comparable properties.
In 16+ years, I rarely find any neighborhood where I can say the predominant value or age is one number. Heck, it takes 3-10 years for some subdivisions to be completed.

Do a truthful honest job and just give a predominant range of value and age if that is the truth. If underwriters don't like it, ask them to read the Fannie Mae guidelines.

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Old 08-14-2007, 05:09 PM
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That's because you've never reviewed any of mine.
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Old 08-14-2007, 05:16 PM
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I agree with the first part of your rant. But.....with some of the statistical stuff available on some MLS systems, I can and do use a single point rather than a range. You mention that some subdivsions take 3-10 years to complete. Which year were most of the homes built?
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Old 08-14-2007, 05:21 PM
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Quote:
Originally Posted by Mr Rex View Post
I agree with the first part of your rant. But.....with some of the statistical stuff available on some MLS systems, I can and do use a single point rather than a range. You mention that some subdivsions take 3-10 years to complete. Which year were most of the homes built?
Gee, if they build about the same number of homes each year, who would know. That is why one number is ridiculous in most instances.

Statistical stuff usually means "average" not predominant. You could have 12 homes at $100,000 and 12 homes at $200,000 and the MLS would give you a $150,000 statistic. How would that be the predominant value?
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Old 08-14-2007, 05:25 PM
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Statistics aren't all limited to the average as you describe. You can do some neat things if you know how. BTW, have you ever seen a little ditty called Realist?
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Old 08-14-2007, 09:18 PM
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Just another reason why I prefer narrative formats. I can explain the neighborhood and market characteristics without having to deal with check boxes and little slots that can only fit one number.
  #7  
Old 08-14-2007, 10:35 PM
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Predominant - most frequent or common. Not necessarily a range IMHO
  #8  
Old 08-14-2007, 11:15 PM
Brian Weaver Brian Weaver is online now
 
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It's a mode not a mean.
  #9  
Old 08-15-2007, 09:18 AM
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Quote:
It's a mode not a mean.
true enough but its probably best just a good judgment call. The problem is exactly what Hicks said...except when its a reviewer...
These are the sales in a town. the top one is 35 ac with a huge commercial shop and 4000 SF builders house. The appraiser called the Range 140 - 250
The reviewer disagreed saying the range was 120 - 750...so much for reviews...
These are the sales
775
289
280
246
246
227
214
195
194
188
173
168
165
160
159
155
152
152
145
137
135
132
129
122
119
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Old 08-15-2007, 12:47 PM
Kendall Jackson Kendall Jackson is offline
 
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I love the million dollar appraisals where the subject has comps miles away and most homes in area are say mid 300's. Dont you know the predominant value per report is $1,000,000
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