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  #1  
Old 10-11-2009, 04:26 AM
prasercat's Avatar
prasercat prasercat is offline
 
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Default Standard 1-5a/client is buyer

I find it personally embarassing to request a contract/offer price from the person whom is wanting to know what the value of the home is that they want to purchase (and is under contract with an appraisal stipulation). Certainly, when one is trying to protect a lender, we want to know if its a legitimate arms-length transaction, so looking at the contract is important in so far as the lender is using this contract as a basis of their loan, at least initially. However, when the client is the buyer, its just irrelevant and to rely or give weight to their offer price is simply circular reasoning. "Ok Mr and Mrs buyer, I can determine the value, but I would need to know what you thought it was worth first" Is basically how it comes off in this case. I think USPAP needs to address or treat this in more detail and leave it up to the appraiser as to whether or not it should be included in a normal scope of work. In any case, I recognize disclosure is a given. In the mean time, any thoughts on this topic? Naturally, when a realtor is involved, which is normally, one can just get it from the realtor; however, one must disclose this info in the appraisal, which may "****-off" the buyer. My take is that I should ask the client if they want me to have this info. If they don't want me to know, then I can disclose that and not ask the realtor for the info. I can state that obtaining the contract information was not necessary for credible results for the intended use and user. Your thoughts?
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Old 10-11-2009, 08:39 AM
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Mike Kennedy Mike Kennedy is offline
 
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The Wiz of Oz said "You are to be independent and objective - until we tell you it's time not to be."

The Munchkins gleefully sing "follow the $$Green Brick Road."

The Players (including buyers, sellers, re agents, los, mbs, amcs, and many appraisers who cannot appraise a property without the bull$eye) wilfully kneel, bow down, and exclaim "Long Live the Golden Calf".

1989 Title XI FIRREA, OCC & FDIC INTERAGENCY REGS, the USPAP "the lender may (not MUST) provide a copy of a contract to an Appraiser. Appraiser must describe steps taken to obtain copy of contract - if available during the normal course of buz, Appraiser must analyze and comment on contract etc."

HVCC PROHIBITS " (5) requesting that an appraiser provide an estimated, predetermined, or desired valuation in an appraisal report prior to the completion of the appraisal report, or requesting that an appraiser provide estimated values or comparable sales at any time prior to the appraiser’s completion of an appraisal report;
(6) providing to an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed or target amount to be loaned to the borrower, except that a copy of the sales contract for purchase transactions may be provided;"

Within the past year - many/most MTG assignment conditions now morphed into "DO NOT SEND ANY REPORT UNLESS YOU HAVE REVIEWED THE BULL$EYE".


EVOLUTION OF THE BULL$EYE:

THEN: "Appraiser must review a copy of a contract if available during the normal course of business, if one is not available (for a wide variety of reasons including the fact that a contract will not exist until after the appraisal is completed - intentionally - to obtain a totally objective, totally independent, opinion of value ...FIRST in order to NEGOTIATE contract price) Appraiser must stipulate what actions were taken to obtain same IN the completed report."


NOW: "DON'T YOU DARE SEND IN ANY REPORT UNLESS YOU HAVE REVIEWED THE CONTRACT AND EXPLAIN WHY YOUR VALUE OPINION DOES NOT MATCH THE CONTRACT PRICE!!!!!! IF YOU DO - YOU WILL NOT BE PAID AND A FORMAL COMPLAINT WILL BE SENT TO YOUR STATE BOARD".

"HOW DARE YOU !!!! WE CANNOT BEEEEEELIEVE YOU HAD THE AUDACITY TO SEND IN A REPORT THAT DOES NOT MATCH THE DAMN CONTRACT PRICE WE GAVE YOU !!!!!"

APPRAISERS RECEIVE 100 STIPULATIONS CAJOLING, INSTRUCTING, REQUESTING, DEMANDING CONSIDERATION OF FARSICAL ADDITIONAL SALES, REVISIONS TO ALREADY COMPLETED REPORTS TO REFLECT CONTRACTS GENERATED .........DAYS, WEEKS, MONTHS AFTER APPRAISALS WERE COMPLETED - TO HIT THE BULLSEYE.


(POSTER NOTE: all quotes above paraphrased based on actual regulations, guidelines, assignment orders, and demands from the "players")



thoughts? see my tag line.
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  #3  
Old 10-11-2009, 09:16 AM
Mike Kennedy's Avatar
Mike Kennedy Mike Kennedy is offline
 
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Follow-up

USPAP DEFINITION:
APPRAISER:
one who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective.



IMO, it is standard, prudent, Lending Practice among many Regional and Local PROFITABLE Lenders to NEVER provide a Binder Price, or Contract Price, OR Copy of a Contract to Appraisers from whom they request, expect, and demand a totally INDEPENDENT AND OBJECTIVE Opinion of Value.

It is NO coincidence that those MAJOR PLAYERS (including those Lenders now OUT OF BUZ ) who are effectively bankrupt (absent the Billion Buck Bailout funds they desperately needed to keep THEIR doors open)...... are amongst those DEMANDING Bullseye Review.

Hummm.........no correlation? Those who think not - need to yank the Wizards' Curtain back and see the Truth.


p.s. demanding Bull$eye Review is ABSOLUTELY no different than ......>>>>>>>>>>


http://appraisersforum.com/showthread.php?t=161414
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  #4  
Old 10-11-2009, 09:29 AM
Randolph Kinney Randolph Kinney is offline
 
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Quote:
Originally Posted by prasercat View Post
I find it personally embarassing to request a contract/offer price from the person whom is wanting to know what the value of the home is that they want to purchase (and is under contract with an appraisal stipulation). Certainly, when one is trying to protect a lender, we want to know if its a legitimate arms-length transaction, so looking at the contract is important in so far as the lender is using this contract as a basis of their loan, at least initially. However, when the client is the buyer, its just irrelevant and to rely or give weight to their offer price is simply circular reasoning. "Ok Mr and Mrs buyer, I can determine the value, but I would need to know what you thought it was worth first" Is basically how it comes off in this case. I think USPAP needs to address or treat this in more detail and leave it up to the appraiser as to whether or not it should be included in a normal scope of work. In any case, I recognize disclosure is a given. In the mean time, any thoughts on this topic? Naturally, when a realtor is involved, which is normally, one can just get it from the realtor; however, one must disclose this info in the appraisal, which may "****-off" the buyer. My take is that I should ask the client if they want me to have this info. If they don't want me to know, then I can disclose that and not ask the realtor for the info. I can state that obtaining the contract information was not necessary for credible results for the intended use and user. Your thoughts?
If I understand you, the client is the buyer. Therefore this is not meant to be on the Fannie form since this will be for facilitating a purchase decision, not a lending decision. You have a different scope of work.

Read USPAP on the reporting requirements for a summary report. Other than the purchase price, including personal property in the sale, seller concessions, type of financing, and dates of the contract, counteroffers and any addendum, what else can you analyze on the purchase agreement?

If you can't get a copy of the purchase agreement, USPAP covers that too.

If the buyer is the only intended user, it should not matter if you disclose and discuss in your report the results of your analysis of the purchase contract.

Now, can you be neutral in your opinion of market value with out bias knowing the purchase price and any inducements used to reach the purchase price?
  #5  
Old 10-11-2009, 09:33 AM
leelansford leelansford is offline
 
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Quote:
Originally Posted by prasercat View Post
...

Your thoughts?


I suggest that you comply with the USPAP. Above and beyond Standards Rule 1-5 (a), read Standards Rule 2-2 (a, b, c), (viii). Therein is your answer.
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  #6  
Old 10-11-2009, 09:37 AM
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Mike Kennedy Mike Kennedy is offline
 
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Appraiser - appraise the Real Property

Underwriter - appraise the Contract

Market Value is what the market indicates WHETHER a property is Under Contract OR NOT.
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  #7  
Old 10-11-2009, 10:30 AM
Terrel L. Shields's Avatar
Terrel L. Shields Terrel L. Shields is offline
 
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Again, I don't agree with Kennedy on this.

The contract price is part of the market evidence of the property value. The contract may indicate non-realty interests, concessions, etc. Further, the liablity of over-appraising or under-appraising a property contract price for a private transaction places the appraiser in a potentially litigious situation. Say the Contract is for $540,000. You appraise it at $650,000 for the seller.....hmmm. He withdraws the property and relists for $650,000 and sits and waits and waits. Each day the market will be changing. Now he has to lower the price and lower it until his original offer of $540,000 has deteriorated to $450,000...guess who is going to sue you for $90,000? And the reverse.

If it is offered for sale, I want to know how much the list price was, how long it was on the market, and what is the offer and all the surrounding caveats to that offer.

In a private situation described above, if the contract were not available, I would decline the assignment. Kennedy does not want the contract as a target. I don't want the bullseye moved to my back.
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  #8  
Old 10-11-2009, 11:16 AM
Jerry Bone Jr's Avatar
Jerry Bone Jr Jerry Bone Jr is offline
 
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State: Oregon
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Quote:
Originally Posted by prasercat View Post
I find it personally embarassing to request a contract/offer price from the person whom is wanting to know what the value of the home is that they want to purchase (and is under contract with an appraisal stipulation). Certainly, when one is trying to protect a lender, we want to know if its a legitimate arms-length transaction, so looking at the contract is important in so far as the lender is using this contract as a basis of their loan, at least initially. However, when the client is the buyer, its just irrelevant and to rely or give weight to their offer price is simply circular reasoning. "Ok Mr and Mrs buyer, I can determine the value, but I would need to know what you thought it was worth first" Is basically how it comes off in this case. I think USPAP needs to address or treat this in more detail and leave it up to the appraiser as to whether or not it should be included in a normal scope of work. In any case, I recognize disclosure is a given. In the mean time, any thoughts on this topic? Naturally, when a realtor is involved, which is normally, one can just get it from the realtor; however, one must disclose this info in the appraisal, which may "****-off" the buyer. My take is that I should ask the client if they want me to have this info. If they don't want me to know, then I can disclose that and not ask the realtor for the info. I can state that obtaining the contract information was not necessary for credible results for the intended use and user. Your thoughts?
In this situation an Appraiser could...
ask the Buyer for a copy of the pending sale contract and inform the Buyer that,
1. the Appraiser is required to ask for a copy,
2. the Buyer is not required to provide a copy.
  #9  
Old 10-11-2009, 11:30 AM
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CANative CANative is offline
 
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Lines 783, 784, 785: "If such information is irrelevant, a statement acknowledging the existance of the information and citing it's lack of relevance is required."

There's nothing in (viii) stating an appraiser has to employ any extraordinary steps in obtaining a contract. The buyer-client knows what's in the contract so it's irrelevant to him because he just wants an opinion of market value of the real estate. All the appraiser has to do is disclose that he advised the client of this 1-5, why it may or may not be useful and state that the client declined to provide the information.

If the appraiser feels the need to protect himself he can just use an Extraordinary Assumption that the contract or agreement contains no unusual, non-market or non-realty terms and conditions.
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  #10  
Old 10-11-2009, 11:32 AM
LI-Appr LI-Appr is offline
 
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Quote:
Originally Posted by Randolph Kinney View Post
If I understand you, the client is the buyer. Therefore this is not meant to be on the Fannie form since this will be for facilitating a purchase decision, not a lending decision. You have a different scope of work.

Read USPAP on the reporting requirements for a summary report. Other than the purchase price, including personal property in the sale, seller concessions, type of financing, and dates of the contract, counteroffers and any addendum, what else can you analyze on the purchase agreement?

If you can't get a copy of the purchase agreement, USPAP covers that too.

If the buyer is the only intended user, it should not matter if you disclose and discuss in your report the results of your analysis of the purchase contract.

Now, can you be neutral in your opinion of market value with out bias knowing the purchase price and any inducements used to reach the purchase price?
Yes to Randolph.
Use a general purpose form and define the scope of work, the intended use and user.
Stay USPAP compliant and appraise the subject.. Just think of all the times in the last decade you were given a target and did not hit it. I hope it was many times. This is an easy assignment (depending on available data) to finish as there is no pressure on you and you can let the market dictate the value. Thats the way it is supposed to be.
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