Verifying Sales

[residentialguy]

I have always wondered why some appraisers put a phone call to an agent as the gold standard for verification sources. Many MLS sytems have seller concessions. They have the attached seller disclosures.

- Is MLS error free?
- Does your MLS tell the motivations of the buyer and seller?
- Does your MLS tell why the concessions were involved?

If you answered no to any of those, you have your answer.

 

[ockyappraiser]

another discussion would be have we moved into a more modern day in appraising that verbal conversations with agents are not even necessary? More and more MLS sytems have information on property condition, deed, taxes, concessions all attached to the listing. I typically download each of these and put in my work file. This can be done in a few minutes. What is gained in talking to the agent? Many times, as the appraiser, I hve done far more appraisals in a subdivsion or area then the agent has sold homes. I have the sales concession information. I have written documentation from the seller on the subject condition and interior pics.

The question I think needs to be asked at some point: is actual phone calls to agents becoming old school . . .like the tape measure and clipboard.

 

[residentialguy]

The question I think needs to be asked at some point: is actual phone calls to agents becoming old school . . .like the tape measure and clipboard.

ocky...you need only to read my post 251 to answer that.

besides, I use a new smartphone and e-mail, not that old school wall phone and snail mail :icon_mrgreen:

 

[ockyappraiser]

"Is MLS error free?
- Does your MLS tell the motivations of the buyer and seller?
- Does your MLS tell why the concessions were involved"

I would counter. . .

which is more reliable. . .the MLS entry recorded by the agent at the time of the listing. . .or the agent's memory 6-12 months later while driving the car?

on motivations. . .perhaps a recent sale. .but will the agent remember this type of thing over 6 months and 10-20 deals later?

and yes. . .many MLS systems now have concession recorded.

Again. . .written, workfile documentation vs the memory of an agent many months after the fact that you catch in the middle of doing something else.

 

[Michigan CG]

The most important part of talking to an agent is the condition of the home. Most Realtors sell about 10 homes per year, they remember that 123 Main Street had old worn carpeting and a bad air conditioner, something they didn't list in the MLS.

 

[Delta85]

When I have called agents the typical response I get is "whatever it says in the MLS". . .did the sale have any concessions? "I don't really remember. . .I'll have to get back to you".

I get that a lot from agents. Especially when the sale is a few months old. And I am lucky if they actually get back to me as promised.

 

[residentialguy]

"Is MLS error free?
- Does your MLS tell the motivations of the buyer and seller?
- Does your MLS tell why the concessions were involved"

I would counter. . .

which is more reliable. . .the MLS entry recorded by the agent at the time of the listing. . .or the agent's memory 6-12 months later while driving the car?

on motivations. . .perhaps a recent sale. .but will the agent remember this type of thing over 6 months and 10-20 deals later?

and yes. . .many MLS systems now have concession recorded.

Again. . .written, workfile documentation vs the memory of an agent many months after the fact that you catch in the middle of doing something else.

You would be surprised at how good their memory is. If you're doubtful, go a step further and verify from the other agent. But you can't throw it away.

As far as concessions go, you need more than the amount. You need to find out how much it affected the sale price. Typically it affects it dollar for dollar on adjustments, but not always. It may be not have any affect...it may have much more affect.


Here's a concession I just ran across the other day. You still want to stand behind MLS? Are you going to adjust $181k on a $184k sale ...or say that's typical for the market area

 

[ucbruin]

Calm down....If I had done this in a sneaky way, I could see issue. But this was upfront - it was the same as saying, no I didn't do that, this is what really went down.




I was stating FMNA guidelines. Dennis then showed the grey area, to which I agreed with. Then clarified it again as to how I address that issue.




You don't seem to get it...you need to tear yourself away from gray area. You don't even have a gray area to fall into. You are trying to justify your means by a weakness that might happen to doing the requirements. These are requirements that you need to competent in and need to attempt to fulfill. Sometimes requirements can't be met....when that happens, you disclose that you've tried but were unable, therefore this is what I have and this is how I, as the professional appraiser, handled reconciled it. Now it's in their hands as to whether it is adequate for their use. Everything is spelled out and nothing is misleading. Again, it helps when you have backup comps so you're not placed in that situation.

Funny, you telling me to calm down.

How many different ways can I write on this topic that MY VERIFICATION PROCESS IS IN VIOLATION OF FNMA REQUIREMENTS AND I AM NOT TRYING TO JUSTIFY IT TO YOU, OTHERS AND/OR MYSELF? So I'm not hiding in the gray world.

So now you have gone from Black and White to "EFFORTS"; "a weakness that might happen to doing the requirements"; "and need to attempt to fulfill"; "Sometimes requirements can't be met". Would you like to add any more excuses that you use in order to justify your violating FNMA guidelines?

If you find my position so disturbing then don't dip your toe into the gray world when it benefits you. Live by the words that you wrote 2 or 3 days ago. Stay consistent, don't use "Efforts", "Attempts", "Can't be met" to create "weakness" in your appraisal standards/ethics and succumb to violating FNMA. If it's so important to verify, how can you really justify employing any sale without you meeting FNMA requirements. I'd let up on you if your comments hadn't been so rigid and unwaivering. And now, after days of pointing your finger, you admit that you do violate FNMA requirements.

When I read some of your comments I have to shake my head in the same way I shake my head when I see: 1. The family values politician who gets arrested for solicitation; 2. The anti-drug crusader who is later found buying drugs in a police sting operation; 3. The chest pounding homophobe who has a secret same gender lover; 4. The person who pushes ALL 10 commandments but who himself breaks some on occasion. 5. The FNMA verification guru who employs unverified comps if it benefits him. .

 

[residentialguy]

It's all how you talk to them. You need to be friendly and bud up to him/her. Ask pertinent questions that don't put up their defenses. Tell them that you like to call the agents so your appraisal reflects market value....then ask them "Did you ever get a low-ball appraisal because an appraiser used sales that were distressed and didn't adjust them correctly?" That usually opens them up.

I liked DM's post, which is typical of many of my talks

So, one day I am inspecting some comps from the street and as I had one that seemed low by 20% I had that in mind while inspecting said property. Sure enough I noticed light shining from between the bricks. As is typical when I get back from such I start my verification calls, with that odd-ball as the first on my list of calls. I inquire about condition and the RE agent says it is in "good" condition. I inform him I noticed it seemed to have sold for a bit below other comps and he informs me it was actually an estate sale. I mention seeing light between the bricks and get a long list of deferred maintenance.

That response is also my argument for calling rather than emailing, because I can "read" a person over the phone and listen to their hesitations to the questions I ask and thus what I may want to ask next.

Yep, I call agents. I ask them about specific properties, if they know of others that sold about the same time that they may have showed (especially buyer agents), and may even conduct impromptu polls about how much they believe a certain feature may contribute to value (not just cost, but contribution). I also ask about buyer & seller motivations (and will ask each agent in a transaction as to how motivated they think the other party was. Can't tell you how many times I found out the odd high sale was a person from out of state (who knew EXACTLY what they wanted) or was the neighbor buying for their kid or even the local power plant, or that the odd low sale was a hidden REO, estate sales, odd conditions, functional obsolescence, or that the owner's son was hit by a car and the rental tenant made unforgivable remarks to the owner about his son and he just wanted to be rid of the property.

 

[Michigan CG]

5. The FNMA verification guru who employs unverified comps if it benefits him. .

You are missing most of the point. USPAP Standard 1-4 says that we must verify. The MLS is not verification, it is a source of information. REO says never have what is bad in the MLS except maybe "needs a little TLC". How does one use that information to gain a true condition of that property without a phone call?

Estate sales are typically dated, how does one know that last time the property had any improvements? Calling the Realtor and asking about the property in general terms will often have other information surface like the roof was replaced last year.

If my home were to be on the market tomorrow I guarantee that the Realtor would show photos of my daughter's bathroom as it is completely new with quartz counters but would not show the 1/2 bath that is original from 1994.

The Realtor listing my home would show the new heated floors in our master bath but not the worn out oak floors in the kitchen. The Realtor would show my new deck but would not show the north side soffit and fascia that needs painted.

When doing residential work I attempt to verify the sales with a Realtor but it is not always possible. There are 5-6 Realtors in my area that will never answer the phone from an appraiser and I know who they are. Do I use their sales, sure, but I will put more weight on the sales that I can verify.

More verification equals more credibility.

I was taught to write every report as if it were going to court, and that is my goal. Sometimes goals can be met, sometimes not.