Appraised Value Below Contract Price

[Pittsburgh Pete]

P.S. if one concludes the MV is below the SC price or that the MV is above the SC price, how does Cert 18 factor in? Even if the SC price and the opinion of MV are the same, how does Cert 18 factor in? You are a piece of work!

 

[JSmith43]

In your opinion, how does this part of cert 18 square wtih the appraiser providing an anaylsis that does the very thing the appraiser signs off on that they did not do?

JG, though, I am at times a bit harsh, I really mean to be helpful. Sometimes the temptation to zing you gets the better of me Especially, the slow pitches down the middle, knee high. They often tempt me to try and lift them up and clear the center field bleachers.

Here's my comment on Cert. 18: If you take an intellectually honest approach of settling essentially ties, while reconciling data, you are not breaking that certification.

The behavior of buyers & sellers in an arms length transaction (assuming that means no relational interests in common & no economic interests in common between buyer & seller or other parties to the transaction) is very important data, which should be considered when working with data that indicates a bit of a fuzzy range of value. You should tell the client if you factored this buyer/seller contract agreement into your reconciliation.

Additionally, if the sale involves related parties, economically or otherwise, then I would not introduce their behavior in negotiating a specific price, into the reconciliation, even for the purposes of rounding.

 

[Pittsburgh Pete]

DOH, who said that? USPAP compliance and filling in the form are two sep things, and an MAI has to fill in the same form as you or I, so why keep dragging in the phrase "form filling?"

If you don't want to fill out a form, don't do fed related lender appraisals.

USPAP compliance is another issue, and again , NOWHERE in USPAP does it state that the MVO and SC price need to be analyzed in relation to each other, or corrleated, or reconciled, and there are no advisory opinions that doing so is part of the contract analysis.

 

[Pittsburgh Pete]

How's this grab ya: "The subject is under agreement for a consideration of $158,000 and includes $8,000 in seller assist. The MV based on closed sales in the subject market is estimated at $150,000; it appears that the inclusion of the seller assist in the sales price has resulted in an agreed upon sales price that is in excess of market value." Now, I realize that this would require me to fill out this section after completing the analysis on Page 2--and you would have issues with this because........?

 

[J Grant]

What on God's green earth does Cert 18 have anything to do with this? You appraise the property with no predetermined value--the SC is not a predetermined value in any stretch of the imagination. It is merely a meeting of the minds between the seller and the buyer.

AMAZING!!!!!!!!!!

YOU are more amazing! Read the complete cert 18, which I bet you haven't done since participating in this thread.

See the section in it that says: "(or present anaylsis supporting) a predermined specific value.... the attainment of a specific result of a specific subsequent event (Such as approval of a pending mortgge application).

In other words, cert 18 goes beyond a statment that the appraiser did not have a predetermined value in mind, it says NOT to present an analysis supporting ...which an analysis endorsing a SC price as "reasonable", or a market value correlation would be.

Anyway, I have explained my position, that I think explaining, in a way that does not violate the certs or USPAP, a difference between MVO and SC price can be acceptable But it is certainly not required , as PP and Calvin keep trying to claim, nor is it required by USPAP to be part of the Contract analysis (which others in the thread have pointed out numerous times)

 

[J Grant]

I'll get back to you all later, go to do some real work now to pay bills!

 

[Calvin the Airedale]

"Analyzing the contract would be disclosing if it is arms length or not, any concessions or terms and if any concessions/cash backs/special terms impacts price, if a realtor was involved, if standard terms are present, number of pages, dates signed, any addendums .

No specific regulations state the extent or analysis, particulary as it involves relating market value opinion back to contract price." J.Grant.

How does one know if concessions impact the price unless one has a price with which to compare it that is unaffected by: finance concessions, undue stimulus, normal motivation, et cetera, etc.? How?

That price is the result of your valuation, the perfect tool by which to analyze the contract!

 

[Calvin the Airedale]

What a moronic statement. The MVO needs to be developed to be stated. If the section was on Page 1, then the appraiser would have to develope the MVO on page one, or develop it elsewhere, and then put a comment on page one that thought the MVO is stated on page one, it was developed on page two (the SCA page)

It is not a matter of being a "form filler". All appraisers, res or commercial, when doing lender appraisals for fed transactions work with forms. The forms contain narrative as well as sections where the appraiser puts information. If you want to call it form fillling, do so, but an MAI fills in the same form then as a traineed.

That aside, the appraisal forms were developed with sections in certain order to help organize certain aspects of report development, such as in the SCA grid, when the financing and concession lines are first on the grid. The form is actually very well designed and logical, going from wider analysis (the neighborhood, market area trends), to the more specific.

The contract analysis asked in the CONTRACT SECTION (doh), for a reason, because that's where it belongs. The form designers, wanted the SC section up front for a reason, they wanted to address it BEFORE the appraiser develops the MV opinion. I would suppose the forms are vetted by the TAV, MAI's, GSE's, etc, and designed for a reason, not just thrown together in random order.

So despite your disparaging comment about form filling, the order of sections exist for well considered reasons.

You keep fighing to make people believe it is some kind of requirement, to do ANOTHER contract analysis, AFTER the MVO is developed, when in fact, the ASB and the way the form is organized and language in the certs, specifically are against that.

But hey, if as an individual appraiser you want to do it, go ahead, and if but don't try to claim it is "required" as part of contract analysis, or that a contract anaylsis has to include a discussion of SC price in the context of MVO.

Though some clients are asking for appraisers to comment on a variance between SC price and MVO, they are not asking the appraiser to reference the variance as inclusive of the SC analysis itself.

Even the clients recognize that asking for an explanation of why SC price and MVO differ appropriately belongs toward end of report, after the MVO is opined.
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Almost nothing I've read in this thread is funnier than what I've quoted above. There is a difference between filling out a form, in whatever order, and thinking your way through a valuation problem.

 

[J Grant]

How's this grab ya: "The subject is under agreement for a consideration of $158,000 and includes $8,000 in seller assist. The MV based on closed sales in the subject market is estimated at $150,000; it appears that the inclusion of the seller assist in the sales price has resulted in an agreed upon sales price that is in excess of market value." Now, I realize that this would require me to fill out this section after completing the analysis on Page 2--and you would have issues with this because........?

PP, That is well written and on the face of it, I don't have an "issue" with what you wrote. My issue is more to ask why such a statement is even necessary for us to provide. Your MVO was 150k, the client can see that the SC is 158k, they can see the 8k as concessions disclosed on the contract anaysis section. They can't put it together?

In any event, imo, your very well written statement does not belong in the first part CS analysis , it belongs below the MVO development, perhaps as a narrative on the addendum.

Appraisers doubling back and being asked to provide this kind of explanation is relatively recent, few clients have not asked for it till now, why do you think that is?

 

[Mr Rex]

I think she is hung up on calling it contract analysis, she thinks that is only for the little section of page 1. It is part of the overall reconciliation process as much as anything.