USPAP Standard Rule 2-1

[Mark K]

Surely there is no appraiser stupid enough to submit a report with this wording. It is not possible to be this clueless.

Apparently you too have one of our more prolific posters on "ignore".

Otherwise, you'd realize there are those that claim that level of accuracy.

 

[App601]

Have you ever considered that your "professor" is a moron?

So what criteria do you use for an op

Have you ever considered that your "professor" is a moron?

So what criteria do you use to establish an opinion of value? The average? Are you one who writes " The adjusted values have a range from x to z and my opinion of value is y?

Bark bark. bark

 

[App601]

Have you ever considered that your "professor" is a moron?

So what criteria do you use for an op

Have you ever considered that your "professor" is a moron?

So what criteria do you use to establish an opinion of value? The average? Are you one who writes " The adjusted values have a range from x to z and my opinion of value is y?

Bark bark. bark

The one sale most similar, might be the outlier...so? Why would you tie yourself to a process of mandatory selection based upon "the best" comp? Again, if you are only going to consider one sale as valid proof of value, you only need ONE sale. Again, you are arguing (apparently) that it somehow violates USPAP and is "misleading" to weight all sales equally, or to weight two sales as equals. Why? What textbook teaches that? Where is that in USPAP? Well, short answer it isn't. In fact, ranking sales is a method of comparison that allows the appraiser to select through several sales to arrive at a value. But it doesn't mean they have to select one sale. They could average the whole mess, or they could weight it between two sales.

I am working on a poultry farm. 3 houses are 43' x 500' which was the standard size 10 years ago. The newer houses are 55' x 600'. My comps consist of one with all 43' x 500'; one with only 55' x 600' and yet a third with 2 even older 40' x 400' and three 55' x 500'. The incomes are similar. One has 40 acres, the others nearly the same size as the subject. The subject has a dwelling superior to any comparable- perhaps the biggest newest dwelling I've appraised on a farm in a long time. All sold between $1,300,000 and $2,025,000... pick "one" that is superior to the others. I can't. They all have similarities and differences and adjust in a pretty tight range. In fact, I am likely to look at the income and cost approaches to see what makes the most sense...and in the end, the income approach is likely to be weighted in the final reconciliation. I will have reconciled the sales in that approach...and, pray tell how Std 2-1 is involved in the first place.

I usually try to select my comparable sales one similar, one superior and one inferior It not allways works but if it does my opinion of value will be based on the adjusted value of the most similar usually in the middle. Sometimes I select the lowest value and sometimes the highest So far my client, the bank, has not objected However they had required more information to appraisers who write "The adjusted comparable sales have a range of values from x to z and my opinion of value is y. No more information

 

[Michigan CG]

Apparently you too have one of our more prolific posters on "ignore".

Otherwise, you'd realize there are those that claim that level of accuracy.

Unfortunately as a moderator I do not have the ability to put anyone on ignore. If I could I have a list of those who would be on the list.

 

[Michigan CG]

"The adjusted values have a range from $120k to $160K

I would have a hard time including sales where the adjusted values have this large of a range.

 

[Deleted member 130081]

So what criteria do you use for an op


So what criteria do you use to establish an opinion of value? The average? Are you one who writes " The adjusted values have a range from x to z and my opinion of value is y?

Bark bark. bark



I usually try to select my comparable sales one similar, one superior and one inferior It not allways works but if it does my opinion of value will be based on the adjusted value of the most similar usually in the middle. Sometimes I select the lowest value and sometimes the highest So far my client, the bank, has not objected However they had required more information to appraisers who write "The adjusted comparable sales have a range of values from x to z and my opinion of value is y. No more information

My two cents are a) you have not been misleading, unless you did not reconcile the way you said you did b) averaging/weighting is a poor method in many cases (not all), as it relies on raw data rather than analysis and conclusions - unless you live in a magic market where the homes are all physically similar and the prices paid are similar too, you ought to be putting a little more thought into the variances found and how they relate to your subject and its likely value c) your method of presenting 1 inferior, 1 similar and 1 superior comp is appraising to the client preference instead of presenting relevant market evidence for your own opinion. While we all do this sometimes for certain clients/assignments, because in their minds it provides relevant support, it is a dangerous option as you may be presenting irrelevant data, which in my opinion would be misleading. There is no concrete right or wrong answer here, but do read the certs on the GSE form that have you certify you presented the most physically, locationally and functionally similar comps as possible. The problem is that the sales grid is used for too many functions by too many parties in a single assignment. For instance, many clients somehow think bracketing a certain element/feature provides support for the rate of adjustment, when most often it does not. I personally like the 1 inferior, 1 similar and 1 superior method (FHA), but as I said, it often contradicts portions of the report we actually attach a signature to (providing the most similar comps). Last example is what you and many others do, which is use the sales grid as a mathematical formula, which again only works well if your market is crazy homogenous (and few markets across the country are).

The great thing about this thread (and the forum) is I get to read how others do things and perceive things. I may know I am "right" (LOL) on a certain issue, but if the rest of the world doesn't see it, it not only does me no good, it may do me harm.

A final thought/opinion is while I applaud your interest and concern over USPAP and encourage more of it, I think you should take some time and read it some more. Not trying to be a punk here, just pointing out you may be reading into it the wrong way, evidenced by the title of the thread and what USPAP 2-1 actually says. Others pointed that out in a much nicer way by showing while you did not mess up 2-1, you may have come short of 2-2, where it asks you explain the method you used and the reasoning that supports the analysis. If I read your report and you reasoned/stated that you used the weighted average because your professor and the software said to do it, I would have an issue with that as it lacks analysis specific to the appraisal at hand. If you said you used the weighted average because there were truly no better specific indicators of value and it therefore made the best sense to do it that way, I would not take issue.

Buyers do not think like a computer, so why should you? Just because your client forces the assignment on a certain form that includes certain methods, does not mean the form or methods are appropriate or the best available. One way to describe a reconciliation is to take step back and think about what is in front of you and what you are doing - ask yourself if it really makes sense. Sometimes (often) the data does not make perfect sense or align in a pretty way and in those cases, the "calculation method" (what I call your method) might be a poor one. Don't be afraid to think about what you are doing.

 

[Eli]

I would have a hard time including sales where the adjusted values have this large of a range.

He or she is not giving enough info. There would be other qualitative or quantitative factors considered with that wide of a range. Like motivations or something.

 

[ucbruin]

Explain why "1" is less acceptable than "0" or "5"?

 

[Terrel L. Shields]

The problem is that the sales grid is used for too many functions by too many parties in a single assignment

you did not mess up 2-1,

Correct. So strictly speaking about 2-1, what is "misleading" about weighted averages? Short answer nothing. Does it comply with Fannie Mae? Hint. Fannie Mae isn't USPAP. So you are not bound by Fannie rules by USPAP directly. That is, proximate, recent and similar are a fannie thing, not a USPAP thing. 2-2(a) - (viii) would be more relevant to your complaint. But again, no where in USPAP does such a method get banned.

Sometimes (often) the data does not make perfect sense or align in a pretty way and in those cases, the "calculation method" (what I call your method) might be a poor one.

In much of the property types I do there is no "good" way to do it. You have a wide range of values and other than proximity and recentness, the "similarity" of one mineral interest over another is often, at best, only broadly discernible. I can't see underground. That's why I tend to look at 30 or more sales when they are available. And I may simply take the mean as a metric as close as any other.

The differences between an 80 acre farm with a 40 year old house and barn is vast between one of 120 acres and a 10 year old home, but may be the "best" sale. Or is it the 60 acre farm with the 30 year old house? Or, perhaps the cost approach is the best way to value the subject? It is a judgment. And often when faced by these differences, it's not possible to single "one" sale out as the "most similar". You might determine the most proximate...but is that a meaningful metric really? or the most recent, again, in flat market conditions, that might be perfectly meaningless. It's a choice. And USPAP itself is ambivalent about some choices as it notes, as it says the "amount of detail required will vary with the significance of the information to the appraisal."

Explain why "1" is less acceptable than "0" or "5"?

False accuracy is a big problem in this industry as most appraisers fail to accurately determine the actual "accuracy" that they are capable of. Few of us are "that good"...

 

[djd09]

Not to start but aren't Fannies "rules" "guidelines" actually assignment conditions?