Active listings not considered?

[Bama Bayou]

Apparently the MB never learned anything about the principle of substitution during his appraisal classes.

 

[Lee Lansford]

...
Even posed the scenario to MB. Let's say he (the MB) was lending his own money on this loan and he had to take back the property. Wouldn't he frown on finding out there were many listings WAY lower than what he just lent his hard earned money on? And the appraiser just disregarded them because they were just "active" listings. He still did not get it.

Oh, I suspect that he "gets" it, he just doesn't like it.

 

[phoebe33764]

"Stunned"?

Where have you been the past 10-15 years?

Lee,

I've been here counting my blessings that I have been taught the right way. What I meant to state was that I am stunned that there are many appraisers who disregard the actives especially due to foreclosures dominating the majority of neighborhoods in Florida.

 

[phoebe33764]

I've said this before on an other thread. We are supposed to be looking at the ative listings in the area. We are reporting on the top of page two of the URAR active listings in the subject's market area are from ____ to ____. Where are these appraisers getting that number from? I hope they have data in their workfile to back up what they are saying in the report. The only difference for me was that I just had to grid some in the appraisal report and map it out.

The old 2055 form had a spot on it for active listings and closed sales.

Exactly! I'm sure some of them are just making the numbers up to support their estmate of market value. Who knows.

 

[Mztk1]

Send this to him from Fannie:

"The appraiser’s analysis of a property must take into consideration all factors that have an effect on value, recognizing that a well-informed or well-advised purchaser will pay no more for a property than the price he or she would pay for a similar property of equal desirability and utility if it were purchased without undue delay. To accomplish this, the appraiser must analyze the closed or settled sales, the contract sales, and the offerings or listings of properties that are the most comparable to the subject property in order to identify any significant differences (or elements of comparison) that could affect his or her opinion of value for the subject property. This is particularly important in declining markets because the competing listings and contract sales probably reflect the upper-end of value for the subject property as of the effective date of the appraisal. This analysis will result in more accurate reporting on market conditions, including trends that indicate sale prices for contract sales and asking prices for recent offerings or listings have declined. (Also see Section 403.03, Trend of Property Values, Demand/Supply, and Marketing Time.)"

Something tells me if it were an appreciating market and you didn't use pendings to substantiate market adjustments up, he, having been an appraiser, would be the first to explain how it is done.

 

[phoebe33764]

Apparently the MB never learned anything about the principle of substitution during his appraisal classes.

Ironically, he did mention that he is aware of the principal of subsititution, however he just couldn't understand why I put one in the report and considered the other active listings (in the neighborhood) in my estimate of market value. It was like I was speaking a foreign language.

 

[phoebe33764]

Send this to him from Fannie:

"The appraiser’s analysis of a property must take into consideration all factors that have an effect on value, recognizing that a well-informed or well-advised purchaser will pay no more for a property than the price he or she would pay for a similar property of equal desirability and utility if it were purchased without undue delay. To accomplish this, the appraiser must analyze the closed or settled sales, the contract sales, and the offerings or listings of properties that are the most comparable to the subject property in order to identify any significant differences (or elements of comparison) that could affect his or her opinion of value for the subject property. This is particularly important in declining markets because the competing listings and contract sales probably reflect the upper-end of value for the subject property as of the effective date of the appraisal. This analysis will result in more accurate reporting on market conditions, including trends that indicate sale prices for contract sales and asking prices for recent offerings or listings have declined. (Also see Section 403.03, Trend of Property Values, Demand/Supply, and Marketing Time.)"

Something tells me if it were an appreciating market and you didn't use pendings to substantiate market adjustments up, he, having been an appraiser, would be the first to explain how it is done.

True. It is funny how that works when the tables are turned.

 

[David Dietz]

It is simple to explain to MB by asking them if they would have paid $45k for their BMW if they could go across the street to the other dealer who had the same car for $30K.

 

[JRS at OBX]

Now I include a pending and active with every report as possible and no one has asked for any additional info in months.

Knock on wood!

 

[timd354]

Apparently the MB never learned anything about the principle of substitution during his appraisal classes.

The principle of substitution for mortgage brokers is different than it is for apprasiers. To mortgage brokers, the principle of substitution mean that when you find an appraiser who won't hit the target value or "play ball", then you substitute another appraiser for him that will "play ball".