Opinion, Please - Request For Value Reduction

[TRESinc]

Yeah keep number hitting you people who do so and appraising to SC price when no other indicator besides contract supports doing so and watch all the hard work to restore confidence in appraisal over past 5 years be wiped out. If clients and Fannie and regulators come to believe they can not have confidence in appraisers even after all the legislation and firewalls etc, this time there will be no second chance and we will be marginalized even further. .

while i am not an advocate for changing the value on a report without a valid reason i have to ask:

did you read the first post?

Adjusted sales are 168,500, 172,500, 183,000 (this one is an almost exact match), and $152,500 (a sale directly next door, used in position four, settling slightly over one year previous, added to explain/support commentary regarding slight market upticks -- REO sale).

165k is not only within the range of adjusted values it is above what the house next door, the only REO sale just like the subject, sold for just over a year ago in an increasing market.

 

[Artemis Fowl]

JG: Sounds like a case of my opinion is "THE VALUE" syndrome. My 1st post referenced credibility...remember that conversation a little while ago? States have an appeal process for assessed values because they recognize that their number is not THE VALUE but more likely exists as a range. Judges hear these cases and weigh the CREDIBILITY of the evidence presented. Oftentimes, negotiations take place to avoid court altogether. Is that a violation of whatever rules you think exist? How can any of us tell him what's right or wrong from here? Is it influence to achieve a desired result or a business decision that does not reduce the credibility of the opinion? I side with whatever the OP believes to the most appropriate action based on his knowledge of the valuation problem. Only he knows if there exists a compelling reason to reconcile to 170 vs 165.

EDIT: How is this any different from the arguments supporting reconciliation to a contract price when it is entirely credible to do so? He didn't have that indicator then...now he does.

 

[J Grant]

OP- "the home is on 2.7 acres. The client does not appear to have any issue with comparable selection or the methods use to determine the value opinion. "

What was the acreage for the REO house , condition and size of home etc compared to subject? REO is a sale type, tells us nothing about the property.

OP-"Adjusted sales are 168,500, 172,500, 183,000 (this one is an almost exact match),

The sale that is almost an exact match sold for 183k, yet people here think a value opinion of 165k is credible?

OP- "and $152,500 (a sale directly next door, used in position four, settling slightly over one year previous, added to explain/support commentary regarding slight market upticks -- REO sale). I have three listings with the report on an addendum, they adjusted to $171,600, $169,800 and $173,400.

Nothing supports a value of 165k except an year old REO that happened to be next door. He did not say the REO is the most similar property, he said the house that sold for 183k was most similar. I did not see the comps nor subject so don't know but based on this, why is a less similar year old sale that was an REO more reliable for a MV opinion than a more recent, most similar to subject sale for 183k?

 

[Artemis Fowl]

Tell us why he didn't reconcile to 183k then? Oh wait...YOU can't...neither can I. I believe I stated in both my posts that only he could judge the credibility of his decision.

I was sooo tempted to just put a after my 1st sentence.

 

[J Grant]

In addition to above post 23, which reflects why the 170k from what OP said is the better supported value, and may even be low, it it's been an increasing market and most similar sale is 183k...

In addition, yes a SC price is an indicator. But this one sounds suspicoius. WE are supposed to analyze the sales contract/listing and determine relevance from that. The subject is a foreclosed former revserse mortgage listed it sounds too high at 220k (why so high...to keep buyers away because RE agent has a pocket investor?), then it gets slashed in price from 220k to 165k which is very extrement magically the next day gets a sales contract price for 165k

Look at the name of the buyer carefully. It is not unheard of for former owners who defaulted to buy back tehir own property cheap later, or have a straw buyer associate do that for them. Which may not be teh case here, but it has been known to happen. The RE agent also could have a straw buyer buying with RE agent having an interest. There is a lot of fraud and games with reverse mortgages and investors trying to buy REO under market. So how reliable an indicator is that 165k sales contract.

 

[J Grant]

Tell us why he didn't reconcile to 183k then? Oh wait...YOU can't...neither can I. I believe I stated in both my posts that only he could judge the credibility of his decision.

I have no idea why he did not reconcile to 183k, or 175k etc. All I can do is point out his own clues to the comps.
HE might have reconciled low because subject property is REO owned, which technically is not correct for a market value purpose appraisal, unless the property due vacancy/neglect shows poorly etc.

 

[Artemis Fowl]

 

[Mr Rex]

I wonder if there is any stigma locally to REO status? I have had assignments in the past where they want "As Is" market value but want you to ignore the REO stigma. So I tell them its worth $180 but it will not sell for over $165.

 

[J Grant]

IF an appraiser feels "REO stigma" is present in a subject then other comps should be adjusted down to that but what is stigma comprised of...
Our subject vacant and rest of comps were occupied / furnished and showed better, is that the "stigma" , affecting price? Since subject is listed as an REO (we analyze listing ), does that fact alone mean the listing attracts a different set of typically motivated buyers ? So much depends on condition of subject, how it shows if vacant etc...as usual is market specific.

In this case OP presents an odd set of circumstances where it was listed ( deliberately?) over priced at 220k then a huge drop to ( under price?) at 165k. and like magic it goes to contract (how soon after price reduction to 165k. To whom? A pocket investor buddy of the RE agent perhaps? How long was subject exposed to open market after being reduced to 165k>

While it might not be the case here, there can be games with listings and pocket investors around these properties. The list price history of over pricing to instant contract after a steep price reduction would send up a red flag about how much to rely on the S C price as a MV indicator.

 

[J Grant]

There is no such thing as THE value, as we know , Assessed valuation I am not directly familiar enough with process so don't want to comment.

But as far as MV purpose assignments, there seems to be two schools of thought: A or B:

A) It's s just an opinion! Who knows if any number in a range is better than another...the value opinion can be any number in a range who am I to say....since we're not that good . So might as well pick a mid point for a value or if it's a purchase then at SC price when if it is reasonable, even if reasons are marginal. Does a similar mushy attitude go into picking the comps /reconciliation of them ?.

B) Appraiser is willing to stand behind their value opinion not because of an egotistical notion that it is THE value, but because their development led them to believe it to be the stronger supported value point among the range. The appraiser considered sales/listings with attention paid to the fact that comps are not interchangeable properties, some are more similar to subject in key characteristics and thus more reliable to base a value direction in the reconciliation. In B scenario an appraiser might choose to reconcile at a SC price, but there will be a preponderance of good support to do so besides the SC itself.