Incomplete purchase contract provided

[residentialguy]

Most "low" appraisals now are the results of price declines in the market. Appraisers of all people should understand that

I disagree. I think there is a substantial amount of poor appraisal practice going on, fueled by these cheap half rate AMCs

 

[J Grant]

Denis, I'll address some points when I have time! ):

 

[J Grant]

Most "low" appraisals now are the results of price declines in the market. Appraisers of all people should understand that

I disagree. I think there is a substantial amount of poor appraisal practice going on, fueled by these cheap half rate AMCs

We'll have to agree to disagree...the same appraiser sare out there today as before (with a few lossses). Just who hires them is different. Why do you presume a cheap AMC encourages low values? The appraisers who work for AMC's have the same pressure and expectation to make SC price as working for any other client. There is little appreciation or "reward" for not making SC price, whether the appraisal was ordered by an AMC or not.

 

[residentialguy]

They don't the diligence necessary for a credible report. They're doing 2-3 appraisals a day. We've seen more. They're just taking the closest comps that will fit in the form without verifying anything or taking any of the conditions of sale into consideration. With all the distressed situations out there, there's a good chance your comps will give the illusion of a lower market value because they were inappropriate comps and not adjusted to reflect market value.

Viewing the subject's market value range in terms of the most probable price outcomes of a median sale, ignoring market reaction towards conditions of sale and buyer advantage, they will show support for a low end of the range that is more representative of a disposition value or liquidation value.

 

[J Grant]

Res Guy, it's pretty simple for even the most rushed AMC appraiser to adjust up the REO comps to market value. Even they have time for that.

I am not a big fan of cheap fast appraising, but if anything, particularly when a SC is in play, fast/cheap would gravitate toward making SC price. When they do that, job over, on to the next. When they don't make SC price, the job goes on for days with an AMC...reconsiderations of values, etc.

 

[residentialguy]

Res Guy, it's pretty simple for even the most rushed AMC appraiser to adjust up the REO comps to market value. Even they have time for that.

I am not a big fan of cheap fast appraising, but if anything, particularly when a SC is in play, fast/cheap would gravitate toward making SC price. When they do that, job over, on to the next. When they don't make SC price, the job goes on for days with an AMC...reconsiderations of values, etc.

But they don't. You're even making a bold assumption that these green peas know how...that would mean they actually have to look at the market variances. These guys want as little of adjustment as possible. Start adjusting, then you have splainin to do. Start splainin and you can't pump 2-3 out every day.

Most reports that I've seen that fall below contract are a POS.

 

[J Grant]

That might be your experience, my experience is every inflated value report I've seen is a double POS!

It takes one minute to make across the board upward adjustments for REO's and paste in a canned statement explaining why. That is much faster than not coming in at SC price and having to field days of phone calls, questions, and ROV requests.

Put them through one time wasting ROV, and a volume oriented AMC appraiser will make it their business to come in at SC price from that point on.

 

[residentialguy]

Ok...an inflated value report is a double POS, so that means the deflated value is ok. :wacko:

 

[J Grant]

Denis, though our process is the same to the point of establishing the comps and value range, there is a point of divide where we differ, and to clear up a bit of nomenclenture ...providing it falls within the range, I consider the contract and a significant piece of data, you consider the contract price a benchmark of market value.

In other words, if you were doing a refinance, and you develop a range of value, and then according to best comps and research, opine a point value you feel is most credible and supported.

But, if it were a purchase appraisal, assuming the SC price is within your developed range of value, you rely on the SC price to set the MVO .

I do a purchase appraisal same as I would a non purchase appraisal, I develop the range of value, then my MVO relying on all the research. I likely have seen the SC price, and though aware of it, try to separate it out for at least some of the development of the MVO. Then, I will compare my MVO to the SC price. If the yare close, or in a range I feel that the market supports, I will often opine to the SC price, or above. But if there is too much spread between my MVO and the SC price, and I cant find further support with additional research for the SC price, then I will opine my MVO at the point where I feel it is most credible and supported..in other words, at that point, the bulk of the research and comps and market conditions are indicating a MVO lower than the SC price, perhaps withn a 3-5% range.

The problem as I see it, is that in a purchase appraisal, you don't actually develop your own MVO, when the SC price is within a range of value. You figure that anywhere within that range is an acceptable point of MV, since the market is imperfect.

Correct me if I am wrong or mis stated any of the above...I may give a further example in another post.

 

[J Grant]

You can call it whatever you want, but you are doing exactly what I am advocating. You are not acknowledging that the contract price is significant data point (I think it is, if one uses it to set their OMV), and your willingness to use it as the significant data point is restricted to a 1-2% (as a rule) variance.

Our difference: I do not use the CS price to set MV. I develop my own MVO, and then vet it against the CS price. If only a small variance separates them, and the variance is tolerable within market conditions, then I will opine to the SC price, using it in consideration , at times a siginficant consideration, of data . But, if too much of a gap exists between my MVO and the SC price, and the gap represents market conditions and indicators from the other comps that supports my MVO more credibly then the SC price, I will consider my MVO better supported by the research and comps, and that the CS price is a weaker data evidence of MV, and go with the MVO as the best credible and supported point value.

You don't have to make that decision, because as long as it is within the range, you rely on the SC price to set the point value of MV.

If I mis stated something or mis intrepreted it the process, am open to suggestions.