Extraction Method

[alebrewer]

How can you give "no weight" to an approach that tends to support the value indications that resulted from the application of the other approaches?

easy. As I've stated previously, in my opinion, the cost approach is meaningless for residential assignments. That is an opinion which I know is not shared by all, but you asked how I can do it.

 

[djd09]

the cost approach is meaningless

you are making AI members squirm as you type.

 

[George Hatch]

If your institution is promulgating these expectations for the assignments you engage then I certainly hope you have documented those expectations and distributed them to the appraisers, and are not relying solely on those appraisers to share the same intuitions you have been expressing here. Just the manner of discussion you're getting in this thread should be demonstrating that.

Nobody can be required to meet expectations which are otherwise uncommunicated.

And FTR, the Reconciliation section includes a line for all three value indicators developed elsewhere in a report, 2 of which you're saying have no bearing on the appraiser's opinion of value; then there's an open comment field which has no instructions, and then the additional clarifications for subject to and as is and disclosure of assignment specific assumptions are below that. There is no indication anywhere that the appraiser is skipping a final reconciliation of the approaches to value used.

 

[alebrewer]

If your institution is promulgating these expectations for the assignments you engage then I certainly hope you have documented those expectations and distributed them to the appraisers, and are not relying on those appraisers to share the same intuitions you have been expressing here.

Well, first of all, they're not intuitions - intuitions refer to feelings, and what I've stated are simple facts. Second, I am not the one signing the certification(s). I assume that, if an appraiser takes the responsibility of signing the certification, he or she is aware of what they are signing.

 

[Artemis Fowl]

wait a second. Where did I make the statement that I self identify as a "reviewer"?... do you folks even read the comments, or are you satisfied just making stuff (to be PC) up? Kind of scary that you might be doing the same in your appraisal work...

My bad...state investigator was the verbiage you used.

 

[alebrewer]

If your institution is promulgating these expectations for the assignments you engage then I certainly hope you have documented those expectations and distributed them to the appraisers, and are not relying solely on those appraisers to share the same intuitions you have been expressing here. Just the manner of discussion you're getting in this thread should be demonstrating that.

Nobody can be required to meet expectations which are otherwise uncommunicated.

I personally could care less whether an appraiser develops the cost approach or not. Neither the underwriter, the lender, the investor, or the agency will care at all about the cost approach, with the exception of the appraiser's opinion of site value. And, IMO, the reason the opinion of site value is important is that it could potentially point to a H&B issue.

 

[alebrewer]

My bad...state investigator was the verbiage you used.

That I did say, and that I was. No longer.

 

[CANative]

It's been a really long time since I've heard from an appraiser with such a jaundiced view of an approach to value.

It's an economic model that produces an indication of value, market or otherwise. I do this approach on almost all assignments. I even consider the IA on most assignments even if I don't plan on completing it.

If "Neither the underwriter, the lender, the investor, or the agency will care at all about the cost approach, " then why is it virtually all lender assignments come with the requirement to develop the cost approach (although they push my buttons by phrasing it "fill out the cost approach section")?

 

[George Hatch]

You very much are expressing a personal opinion - on the fact-free basis - that these appraisals are based solely on the results of the Sales Comparison. As I say, I hope you are conveying that expectation to the appraisers who are doing business with your institution.

Have you ever heard the term "we don't appraise properties - we appraise property rights"?. What is your response to a leased fee interest based on a legal encumbrance to those property rights and including non-market rental terms? Something an appraiser usually will be unable to isolate in a Sales Comparison? They can develop the sales comparison but under certain circumstances they might not give it most weight.

Or, since you're a GSE specialist, consider your 1025s; particularly when performed in jurisdictions with rent control. The possibility of existing rents at non-market terms which cannot be significantly raised can and will sometimes be of effect on an appraiser's value conclusion - sometimes very different results than a Sales Comparison would otherwise indicate.

Affordable housing where the sale prices are dictated in advance and where the market value of the property rights appraised are completely different than the results of the sales comparison - thus belying the "solely" that you have loaded into Fannie's "relied on the sales comparison" clause.

There's a significant distinction to be made between an appraisal that will prompt Fannie to reject that deal for not fitting into their program vs an appraiser being in error in submitting that appraisal.

 

[alebrewer]

It's been a really long time since I've heard from an appraiser with such a jaundiced view of an approach to value.

It's an economic model that produces an indication of value, market or otherwise. I do this approach on almost all assignments. I even consider the IA on most assignments even if I don't plan on completing it.

If "Neither the underwriter, the lender, the investor, or the agency will care at all about the cost approach, " then why is it virtually all lender assignments come with the requirement to develop the cost approach (although they push my buttons by phrasing it "fill out the cost approach section")?

We do not require the cost approach, but it is my understanding that the reason some lenders do is for insurance purposes...