Using comps after appraisal effective date

[CANative]

What reasonable person would gig an appraiser for putting this sale in the first place position? The appraiser runs their comps the night before and sees this pending sale, inspects the property and inspects the comp. The next day he or she finishes up another assignment and the next morning starts writing up the current assignment and when interviewing the agents finds the sale closed escrow. The two days in between was just the escrow process winding it's way through the final stages of red tape.

Honest to peet moss. This forum can get truly silly at times.

 

[Lee Lansford]

What reasonable person would gig an appraiser for putting this sale in the first place position? The appraiser runs their comps the night before and sees this pending sale, inspects the property and inspects the comp. The next day he or she finishes up another assignment and the next morning starts writing up the current assignment and when interviewing the agents finds the sale closed escrow. The two days in between was just the escrow process winding it's way through the final stages of red tape.

Honest to peet moss. This forum can get truly silly at times.

Allow me to be the contrarian:

What if this pending sale closed 3 days following the effective date?

How about 1 week following the effective date?

2 weeks?

1 month?

What's the "cut-off"?

 

[Kevin Mc]

Routinely use one (when available) a confirmed Contracted Sale as 1 of at least 4 comparables (3 confirmed closed sales), citing BOTH the Contract Date and Pending Close Date - if it's scheduled to close after the Appraisal Report Date per the Listing Agent. If no confirmed/reporting closing date has been set - simply report the confirmed Contract Date.

I like your answer best.....

 

[CANative]

Allow me to be the contrarian:

What if this pending sale closed 3 days following the effective date?

How about 1 week following the effective date?

2 weeks?

1 month?

What's the "cut-off"?

I think the next edition of USPAP should include "The COMMON SENSE Rule."

 

[Mike Kennedy]

I like your answer best.....

:blush: awww chucks n tanks.

 

[Couch Potato]

As far as I'm concerned (in the land of no comps) a comparable sale that closed after the effective date but before the report date is a good comp 1 sale. Just explain.

I agree with Greg. The effective date merely refers to the opinion of value. As long as the report date is after the sale closed there is not a problem unless some market altering event has occurred.

Allow me to be the contrarian:

What if this pending sale closed 3 days following the effective date?

How about 1 week following the effective date?

2 weeks?

1 month?

What's the "cut-off"?

If you bother to read Statement 3, you will see, "The appraiser should determine a logical cut-off." The whole issue is merely the result of Fannie's insistance on the effective date being determined by the inspection rather than being the time when the opinion is finalized, the report date.

 

[Mr Rex]

I think the next edition of USPAP should include "The COMMON SENSE Rule."

If all Appraisers had common sense, there would be no need for USPAP. If USPAP had a "Common Sense Rule", there would be far fewer Appraisers.

 

[Green Hornet]

So, I inspect on Monday and write the report on Wednesday. Tuesday the subject burns down and I know about it prior to writing the report.

Am I appraising a subject as it was on Monday or on Tuesday?

I know it is against the combined wisdom of the wise ones of this forum, but...no, I would not use it as a closed sale. It would make a good pending, but it was not closed as of the date of the inspection.

 

[KenAZ]

You can use sales either before after or during the effective date. There is no FNMA, USPAP, FHA or any other reputable entity that says otherwise.

Think about it. A pending sale of the home next door that is the same model as the subject shows $200,000 on MLS as of the effective date. It closes the next day for $150,000. You write the report and discover that this pending sold. This may be your best comp.

Why would you not use it?
Because some client decided that they don't like you to use a comp the day after the effective date?

Using it as a pending sale is misleading. Using it as a closed sale is solid and is a very powerful indicator of value. Make it comp 1 in all caps. Emphasize in the report that this is the best comp BECAUSE it closed the day after the effective date of the report. That is by far the most recent sale and the most proximate sale.

Comps dated before or after the effective date are supposed to be selected based on what the appraiser thinks is reasonable, NOT what the AMC thinks is reasonable.

The thinking that we cannot use comps that closed after the effective date is just like any other old wives tale. The rumor just keeps spreading, even though it is not true.

 

[Mr Rex]

So representing it as a closed sale comparable when it didn't close before the effective date is not potentially misleading?