Reconsideration of Value: How to respond?

[Mike Kennedy]

ahhhhh.......Huh? We're talking about the subject here...I think that's available to the appraiser during the normal course of business

Standards Rule 1-5
When the value opinion to be developed is market value, an appraiser must, if such information is available to the appraiser in the normal course of business:
(a) analyze all agreements of sale, options, and listings of the subject property current as of the effective date of the appraisal; and

Comment: See the Comments to Standards Rules 2-2(a)(viii), 2-2(b)(viii), and 2-2(c)(viii) for corresponding reporting requirements relating to the availability and relevance of information.

2-2(b)(viii) Comment: When reporting an opinion of market value, a summary of the results of analyzing the subject sales, options, and listings in accordance with Standards Rule 1-5 is required. If such information is unobtainable, a statement on the efforts undertaken by the appraiser to obtain the information is required. If such information is
irrelevant, a statement acknowledging the existence of the information and citing its lack of relevance is required.

 

[residentialguy]

That would probably be a private sale, therefore would not be a good indicator of an open market sale. I don't know why you're bringing it up something so obscure. Obviously if you can't get the data, you can't use it.

 

[J Grant]

USPAP says consider all market data...imo a subject contract is not "market data", because market data is events taking place or that have taken place that are a matter of public record, and obtainable by most market particpants...thus buyers and sellers and realtors have the same or similar access to public records and MLS listings (assuming a buyer is working with a realtor)

But a contract is propietary information that the realtor normally does not share and is knowledge the appraiser possesses particular to the subject.

The appraiser is asked to comment on the contract (we are asked to "analyize it, "which imo is absurd). Seems the purpose of the analysis is to inform lender and users of appraisal of concessions, equity gifts, and other factors that may impact price. Imo this should be an underwriter function, not an appraiser function.

Afterward, there is no directive from USPAP on whether or not a contract should be considered as market evidence of value...that is an individual appraiser decision...imo a contract is evidence of parties arriving at a negotiated price, not value.'

It is our job to opine the MV, and at that point, after our reconciliation, it will be shown via the MVO for subject whether or not the SC price is the same as the MVO, or above it, or below it.

How can an appraiser derive an indpendent opinion of MV for a subject, when they start out with the bias that the SC price is a strong indicator of value, because a buyer wants to pay it ? The appraiser is supposed to be neutral in that regard.

 

[residentialguy]

USPAP says the subject contract a "significant piece of market data". It's a pending sale, just like all the other pending sales, except we have the privilege of knowing the details of the contract, which USPAP also requires us to analyze.

 

[J Grant]

Where does USPAP say the subject contract is a significant piece of market data? In any event, since we are supplied the contract price, we consider it, then move on and do our appraisal.

Hopefully, the other pending sales which are going for financing, their appraisers are doing the same.

If each appraiser opines MV for their pending sales, we have a market that is driven by MV. IF each appraiser is rubber stamping their pending sales prices and labeling it market value, we have markets driven by price, prices that are distorted due to perks and concessions and stimulus, and prices that can wildly crash or skyrocket.

A market driven by value, where appraisers are doing their job, prices rise and fall as well, but are tempered by the intrinsic market values that anchor the prices.

Clearly, too many appraisers rubber stamped during the boom, with prices accelarating above MV, and then appraisers were so distrusted that lenders looked to BPO's to set list prices for REO's, with the result of prices crashing down, since a BPO is not a MV report.

Appraisers are trying to reclaim their ground of MV expertise and integrity, but it is fragile...lenders might push for values, but they view appraisers whose opinions they can buy as expendable and untrustworthy.

 

[SANDY]

Bulls eye!!!! hit the target yo! realtor nonsense!

 

[Delta85]

I have an agreement starting last week with one AMC that if after reviewing sales provided by the client I feel they in no way have any relevance to the report and are inferior to the comparables I chose I can and will submit a request for an additional fee of $50. I made my first $50 last week.

I also use a comment similar to the one Resguy posted and always request a brief summary from the client as to why they feel these new sales are superior to the ones chosen for the report.

I take it as an insult and a waste of my time to be presented random sales chosen either without knowledge of accepted appraisal practice and without access to local MLS or simply cherry picked based on sales prices. AMC think we can respond in minutes but very often we have to verify with town sources that sales actually closed and verify details with realtors, all of which can eat at your work day.

I've never had a ROV that ended up with a sale I felt I should have used or that effected my report in any way. I have no problem responding to actual data that makes sense, but I'm getting paid from now on for responding to wild goose chases.

 

[J Grant]

good for you Delta!

The ROV is a total insult and should be paid, it is a consulting post appraisal assignment. The appraisal already has been completed and delivered.

The ROV "punishes" an appraiser for not making SC price..hit SC price, supported or not, doesn't matter, pass go and get another order.

Don't make the unsupportable SC price and you get to spend unpaid hours defending your work and looking up absurd comps and explaining why you did not use them.

Rename the ROV to what it really is: MTW (make the deal work).

Here, appraiser, are 8 ridiculous sales the realtor selected to MTW. Go look them up and waste your time explaining why they are not suitable comps.

 

[residentialguy]

Excellent, Delta. I'm going to revise my Reconsideration Blurb to include that the lender must submit a summary why they feel these new sales are superior to the ones chosen for the report.

 

[DJBanas]

good for you Delta!

Rename the ROV to what it really is: MTW (make the deal work).

Here, appraiser, are 8 ridiculous sales the realtor selected to MTW. Go look them up and waste your time explaining why they are not suitable comps.

This is why, in my opinion, we are starting to see more of the requirement to show ALL of the comps in the market that we didn't use in the SCA grid. We are being asked to nail our coffin shut after we get in. I believe that this requirement crosses the report from a summary to a self-contained report. I'll do a self-contained report but not at the C&R of a summary. I like the suggestion that any ROV comps that are being sent over have an explanation of why they should be considered or used. :new_2gunsfiring_v1: