Using Subject Prior Sale as a Comp

[Don Clark]

Don, I would like that information posted for the benefit of all

Sincerely,
Rob Lentz

Rob,

I have posted it here before, but will do so again:

Customer Assistance Group
1301 McKinney Street, Suite 3450
Houston, Texas 77020-9050
800-613-6743, FAX 713-336-4301

www.helpwithmybank.gov

The lender was also reported to HUD as it was an FHA appraisal and received a call from the HOC.

 

[Webbed Feet]

Mr. Lentz,

A complaint with a state banking authority works too.

Michigan

Office of Financial and Insurance Services
611 W. Ottawa St., 3rd Floor
PO Box 30220
Lansing, MI 48933-0220
517-373-3460
Toll free: 1-877-999-6442
Fax: 517-335-4978
E-mail: ofis-fin-info@michigan.gov
www.michigan.gov/ofis

I had a case the Oregon banking authority took care of pronto. It worked out especially well after the MBer involved told them it was none of their business in a letter to them. Wrong answer! Tell you what to do.

Step A) Add an addendum with one more closed comp. Do the best you can. Maybe two more, use an older one from the project with appropriate time adjustments. Add time adjustment to the prior subject sale if that was needed and you did not do it. Create addendum, reference your prior report to make the new addendum a part of that. Tiddy it up nice and pretty, then deliver it via email. Place in workfile as additional compliance with Standards.

Step B) Wait for MBer to respond saying he doesn't want it and still will not pay.

Step C) Send certified payment demand letter. Wait one week.

Step D) File complaint with banking authority with copy of certified demand letter. Use the words "Out of Trust."

Webbed.

 

[Lawrence R.]

Mr. Lentz,

A complaint with a state banking authority works too.

Michigan

Office of Financial and Insurance Services
611 W. Ottawa St., 3rd Floor
PO Box 30220
Lansing, MI 48933-0220
517-373-3460
Toll free: 1-877-999-6442
Fax: 517-335-4978
E-mail: ofis-fin-info@michigan.gov
www.michigan.gov/ofis

Tiddy it up nice and pretty, then deliver it via email.

Webbed.

You really shouldn't put them right over the plate like that, duck.

 

[Michigan CG]

First of all, to those who disagree with using the subject as a comparable; if the sale is verified with the real estate agents involved and all other parties involved then this sale is the BEST sale comparable. In my grid it would be listed first (not that the order they are listed means anything, but I put the best sale first).

This MB was looking for a way to kill the deal; and including an inferior, non comparable sale would have given him an excuse to do so.

The CHIEF APPRAISER is most likely an uneducated schmo who does what ever the UW tells him.

I hope that Mr. MB gets a phone call from the Michigan banking authority. He deserves it. Go get him Rob.

 

[TJSum]

First of all, to those who disagree with using the subject as a comparable; if the sale is verified with the real estate agents involved and all other parties involved then this sale is the BEST sale comparable. In my grid it would be listed first (not that the order they are listed means anything, but I put the best sale first).

This MB was looking for a way to kill the deal; and including an inferior, non comparable sale would have given him an excuse to do so.

The CHIEF APPRAISER is most likely an uneducated schmo who does what ever the UW tells him.

I hope that Mr. MB gets a phone call from the Michigan banking authority. He deserves it. Go get him Rob.

I don't disagree with any of that, but I still would like to see three other comps used on the report for a total of at least four (who cares what order).

The client wants to make sure the previous subject transaction was truly arms length and at market value, what better way to prove that then to show them three solid "other" comps (at least) to nail it down. Most of the time, if three other sales are not available to support the value, that is a major red flag that there might have been something unusual with the prior transaction for the subject. If the subject was just purchased several months ago, and they got a loan at that time, what did that appraiser use for their three comps??? If that sale was as legit as our new report is proposing, there has to be data out there somewhere to use. If the appraiser on that original report came up with bogus support, well there you go, the concerns are all justified.

 

[Mr Rex]

I wonder why the form designers didn't have the comp 1 slot reserved for the subject as comp, and instead provided space at the bottom of the grid to exhibit and analyze the subject's sales history?

 

[Lawrence R.]

I wonder why the form designers didn't have the comp 1 slot reserved for the subject as comp, and instead provided space at the bottom of the grid to exhibit and analyze the subject's sales history?

Becuase that gives the appraiser a chance to demonstrate whether the subject sale is or is not arm's length. The subject sale is so important, they want to know about it even if it isn't a "good" sale. This is how they deal with Joyce's earlier post about unusual concessions or atyical motvations of the buyer/refinancer. The subject sale history is designed to catch the bad kind of flip.

And Rex, you know that. Please don't worry about what we know, stick to the topic of the subject sale being the best comp or not--which it is. A Fannie Mae form is not the final authority on appraisal technique. And you know that too. I can probably find 50 posts of yours saying what a flawed document the fannie 1004 is, yet now you cling to it to try to salvage a point. A point which is pretty much lost at this time.

 

[PropertyEconomics]

In court, the sale of the subject, if used, is almost always thrown out or disallowed by the judge in my experience. While it may be the best comparable its not always the best sale and there is a tremendous difference. If one is seeking an independent indication of value, the subject could be weighted with such a degree as to miss current market conditions. The only times I have used the subject as a comparble it has been disallowed by the court and I simply dont do it any more.
I may use it as a fourth or fifth comp if it shows something that needs to be shown, but otherwise I simply have been taught that you dont use your subject as a comparable.

 

[Abester]

almost always thrown out or disallowed by the judge in my experience

And some judges in this district love the subject as a comp...and I have not had one thrown out on any condemnation appraisal I have ever had go to trial.

it may be the best comparable its not always the best sale and there is a tremendous difference.

And that is exactly the problem if there are no other COMPARABLE properties. A sale is not a comparable sale if it would not be competitive with the subject.

 

[Mr Rex]

I think the only thing that it shows is a lack of reasonable comparables to support the opinion of value. Surely that is what the lender is looking for and provides a great level of assurance. An appraiser saying this is the best I can do in the market, regurgitate the subjects prior sale, so buy the loan.


How many times have you heard and basically ignored a homeowners claim that "We paid so and so, or this cost this much.....?

Grid away, I think most lenders will simply ignore it anyway, and as in this case, say its only acceptable as an additional comp after a minimum of 3 relevant closed comparables.

The subject as its own comp, the more I say it, the more ridiculous it sounds, from a lenders viewpoint.