Appraised Value Below Contract Price

[J Grant]

Calvin is not alone on the dock, he has Pittsurgh Pete with him, they are sailing off on a boat named the "SS Skippy"

 

[residentialguy]

Clueless and gutless as in posting with an alias ...

Too funny. :new_newbie:

 

[residentialguy]

Calvin is not alone on the dock, he has Pittsurgh Pete with him, they are sailing off on a boat named the "SS Skippy"

They don't seem to be the ones skipping steps in reconciliation.

 

[J Grant]

They don't seem to be the ones skipping steps in reconciliation.

What are you talking about?

What step is everone else skipping?

 

[Calvin the Airedale]

Really, ? Seems major skippiedom is apparent (from some) on the commercial side who do residential work. Taking an arrogant attitude let's them skirt regs and the certs? Really?

FYI, I reviewed a real skippy res report from a cert gen in my area a few years ago. Cherry picked comps and ignored market conditions. I did not agree with his value and derived my own well supported one. I did not report him to the board, left that up to his client , I just turned my review in.

Guess Mr arrogant did not like having his work reviewed by a lowly residential, so he reported my review to the board, as violating USPAP (for no good reason, he just wrote a bunch of gibberish). The investigator found his complaint groundless and dismissed it.

Those arguing so loudly about reconciling to SC prices and how appraisers are not "analyzing " the contract enough, as if that should affect value....as the bard said, thou dost protesth too much."

Every time you post, my firewall reports an ID ten T error.

Nobody in this thread is arguing that that the MV should be reconciled to the sale price. Quite the opposite.

Res Guy comes at this from a slightly different angle but one with which I don't disagree.

There is nothing wrong, when analyzing a sale agreement, with making a statement regarding the reasonableness of the price (which BTW happens to be the one of the main features of any contract). Such statement can only be founded on the MV. A dissection of the terms and conditions will shed light on the price. Since motivations and more explanations of participant reasoning me not be apparent, however, it is often only speculation as regard to contract analysis.

The MV becomes the best method by which to judge the reasonableness of the contract price. Reasonableness, in turn, is an important component of regulatory language. If one reads CFRs as to collateral lending, one comes across the term often.

 

[Calvin the Airedale]

I did not say similar. I said “hits the contract price”

is this a deliberate attempt to deceive others?

Wow! Now I'm getting ID ten T errors on your posts too!

 

[mark hurlock]

Calvin is not alone on the dock, he has Pittsurgh Pete with him, they are sailing off on a boat named the "SS Skippy"

J,

my problem with guys like this is that I did initially not tell him he was wrong. I asked him him to prove he was right and he failed, miserably.

I expected to learn something. Now I am disappointed for wasting my time.

 

[J Grant]

Most sale agreements are negotiated on terms and conditions which approximate the stipulations contained in the definition of MV. That is why so often the contract price is similar to MV, because it is found to be a "market price".

This still does not explain the separated at birth aspect, the fact that the SC price and MV are EXACTLY THE SAME, not similar. And, exactly the same when the terms were not MV, such as builder sales, short sales, etc.

Identical twins, mirror images of each other, the MVO and the SC price, concieved months apart. How is that possible?

How does a buyer of a builder home, who negotiated a contract a year ago, manage to arrive at the exact MVO the appriser will opine later? And the buyer of a short sale, contract signed 5 months ago, he manage to bid the the exact same amount the appraiser will opine months later? And then a first time homebuyer, not well informed, manages to negotiate a SC price that will also be exactly the same as the MVO? Wow! Do all these people all have mental telepathy, to be able to do come up with in advance ,the exact same purchase price an appraiser will opine?

All these buyers and sellers are geniuses, we should bring them to Vegas, let them pick the numbers, they always manage to be right.

 

[residentialguy]

they are sailing off on a boat named the "SS Skippy"

What are you talking about?

What step is everone else skipping?

After all this discussion, you ask that question? Well, there you go. Proof that not every Skippy realizes that they're a Skippy. :new_llying:

 

[Terrel L. Shields]

As with any government boondoggle, the rules have taken on a life of their own and just grow and grow - ...greater governmental intervention and regulation must certainly be the answer. ...This profession is becoming completely farcical. ...the INSANE level of scope creep inherent in even the most straightforward appraisal work, ...

but that does not excuse not rendering a thorough vetting of the contract.

Calvin,

you have posted the requirement that appraisers analyze the contract. But you failed to post any requirement that the appraiser form an opinion of the contract price

No one is asking you to form an opinion of the contract price. They are asking you why YOUR opinion is different. I bet your hienie if you were HIGHER you'd be agonizing over an explanation to head off the inevitable stip.

Is the price higher because of concessions and personal property?
Is the pirce higher because the property is mispriced?

Just how difficult is that? I cannot read "analyze" to just mean i shall think upon these things but not dare say anything about the price. To me that is the central issue the lender wants to know.

I fired a bank 2 weeks ago. Why? A contract that was $8,500 higher than my MV estiamte. AND, it was $5000 above the highest sale in the subdivision, $16,000 above the median sale. If it closes, it will be about the 4th largest house sold there and 10% above the median...a little closer on a per SF basis. And this house wasn't even built yet. It was "pre-sold"...some event that will have to take place months down the road.

I explained that the contract appears to be high because it was a contract for a future sale after the house is built and "subject to" financing by FHA AND that there were no sales in that subdivision to support the value. Since FHA hasn't appraised it yet, the Sales Contract is a future wild card.

The response of the banker (almost certainly pressure from the borrower/builder/Realtor) was to ask me to go further afield - I refused.

Clearly, banks don't give a cadam about the facts of the area sales. My comps were all within sight of each other. They just wanted the appraised value to match the appraisal....it was their "target" and they (the borrower) thought by providing this (perhaps bogus?) future contract they could jack the price (they complained about the previous report we did and they did manage to get about $1,500 more from that sale than we predicted.)

don't forget, I'm still waiting for you to document that analyzing the contract requires forming and reporting an opinion of the contract price.

See above...you don't need to "form an opinion of the contract price." You need to ANALYZE why it is different from your estimate...and report it. There is not one reason to look at a contract, other than concessions and personal property, to vet the contract EXCEPT to explain why your value is different from the contract....