Extraction Method

[George Hatch]

Maybe we're looking at different reconciliation sections? The one at the bottom of P2 of the 1004 has (effectively) three sections - whether the appraisal is made 'as is' or 'subject to', a blank (no freeform) for the opinion of market value, and a blank for the effective date of appraisal... what part of the form contains the section you're referring to?

The top line of the Reconciliation Section of the URAR is this one:

"Indicated Value by: Sales Comparison Approach [______] Cost Approach (if developed) [______] Income Approach [_____]"

So why would fannie's form even include, let alone acknowledge in the Reconcilation section of the report these other two approaches to value at all if they never intended the appraiser to give them *any* consideration in their value conclusions?

The next line has a large comment field that is not otherwise labeled and for which are are no instructions on the form. Even Harrison's Guide to the URAR has always provided instruction about using this field to reconcile the approaches to value used. Meanwhile, you have no reference for saying that this field is not for that purpose, nor is there a hardwired line in the Reconciliation section stating the appraisal is based solely on the results of the sales comparison. Which presumably there would be, just like the lines for "as is" and "subject to" that Fannie added to that section in order to ensure those items were addressed in that manner.

 

[alebrewer]

The top line of the Reconciliation Section of the URAR is this one:

"Indicated Value by: Sales Comparison Approach [______] Cost Approach (if developed) [______] Income Approach [_____]"

So why would fannie's form even include, let alone acknowledge in the Reconcilation section of the report these other two approaches to value at all if they never intended the appraiser to give them *any* consideration in their value conclusions?

The next line has a large comment field that is not otherwise labeled and for which are are no instructions on the form. Even Harrison's Guide to the URAR has always provided instruction about using this field to reconcile the approaches to value used. Meanwhile, you have no reference for saying that this field is not for that purpose, nor is there a hardwired line in the Reconciliation section stating the appraisal is based solely on the results of the sales comparison. Which presumably there would be, just like the lines for "as is" and "subject to" that Fannie added to that section in order to ensure those items were addressed in that manner.

Yes - read my response just a moment ago. You're exactly right. And the only answer I can muster for why that section is there is that maybe it was an attempt by the authors to make the form more USPAP compliant? It is self contradicting. In the certification, the appraiser is certifying that they developed their opinion of market value on the sales comparison approach period. And yet, there is the reconciliation section as well...

As just stated previously, I don't want to change anyone's mind. I am just offering my perspective on what the form DOES state (my Reconciliation faux pas aside). If you want to interpret the certification to imply that you develop your opinion of market value on the sales comparison approach AND the cost approach - that is a personal decision. I'm not signing your certification - you are.

 

[George Hatch]

" I'm not commenting to try to change anyone's opinion. I could care less what your opinions are. "

Nobody here begrudges your opinion. And I daresay that nobody here thinks the Cost Approach returns a meaningful result in the GSE appraisals of most or all properties with existing improvements.

But TBH, it concerns me greatly that any reviewer would project their opinions on one of their peers. What you do in your own work is your business, but when you criticize my work on the basis of your personal (and undocumented) opinions it becomes my business.

When I review, I criticize nothing that I can't demonstrate in black and white. Which means I never criticize an appraiser's opinions or discretion in a review. I go after the facts they're citing in support of their opinions because if there's an error that's where it is usually occurring. Just like we've been doing here in this thread. Hence the utility of not adding meanings that aren't otherwise communicated to the verbiage.

BTW - "contradictions in the form" is a known problem which illustrates why we don't let the form drive the process. In this case, the existence of a field which is used to reconcile the different approaches to value on pg 2 contradicts the "solely" element you have loaded into the "appraisal is based on the sales comparison" limiting condition. The alternative to the form being incorrect is that your interpretation of that clause may be incorrect. If it's the former the form is incompetent and should be modified as necessary, but if its the latter then there is no contradiction.

This URAR has been around in this form for almost 15 years at this point.

 

[alebrewer]

" I'm not commenting to try to change anyone's opinion. I could care less what your opinions are. "

Nobody here begrudges your opinion. And I daresay that nobody here thinks the Cost Approach returns a meaningful result in the GSE appraisals of most or all properties with existing improvements.

But TBH, it concerns me greatly that any reviewer would project those expectations on one of their peers. What you do in your own work is your business, but when you criticize my work it becomes my business.

When I review, I criticize nothing that I can't demonstrate in black and white. Which means I never criticize an appraiser's opinions or discretion in a review. I go after the facts they're citing in support of their opinions. Just like we've been doing here in this thread.

BTW - "contradictions in the form" is a known problem which illustrates why we don't let the form drive the process.

Couple of items that are concerning - where is everyone getting the idea that I am a reviewer? When, once, have I said that I am a reviewer? Or are you just proffering your concern as a general concern?

Regarding projecting expectations on their peers - I would be incensed if a reviewer cited me for weighing the cost approach results in my reconciliation. On the other hand, I'd also be incensed if a reviewer cited me for stating that, in my opinion, the cost approach is meaningless and possibly misleading. That is (Cert 4 aside) an opinion.

Were I engaged to perform a Standard 3/4 review, I would pursue only areas of potential S2 breeches (as it's REALLY tough to pursue S1 breeches without having access to one's workfile), and highlight areas that may point to a differing opinion of market value. Example would be failure to disclose external obsolescence (to cite only one example).

Again, though (why do I feel like I keep typing the same things?), if you want to perform the cost approach, and you want to state that you weighed the results in your reconciliation, that is YOUR business, not mine (unless I'm signing as the Supervisory appraiser, that is).

 

[alebrewer]

Nobody here begrudges your opinion.


Oh - and some absolutely do, as I've been cited as not being a self respecting appraiser for my opinion... so you might qualify that by saying that 'most' don't begrudge my opinion(s)...

 

[George Hatch]

Couple of items that are concerning - where is everyone getting the idea that I am a reviewer? When, once, have I said that I am a reviewer? Or are you just proffering your concern as a general concern? Also, when have I criticized anyone's work? Much less, yours? I don't even know who you are.

Regarding projecting expectations on their peers - I would be incensed if a reviewer cited me for weighing the cost approach results in my reconciliation. On the other hand, I'd also be incensed if a reviewer cited me for stating that, in my opinion, the cost approach is meaningless and possibly misleading. That is (Cert 4 aside) an opinion.

Were I engaged to perform a Standard 3/4 review, I would pursue only areas of potential S2 breeches (as it's REALLY tough to pursue S1 breeches without having access to one's workfile), and highlight areas that may point to a differing opinion of market value. Example would be failure to disclose external obsolescence (to cite only one example).

Again, though (why do I feel like I keep typing the same things?), if you want to perform the cost approach, and you want to state that you weighed the results in your reconciliation, that is YOUR business, not mine (unless I'm signing as the Supervisory appraiser, that is).

Apologies, I thought I caught a reference about you being a chief appraiser and providing CE instruction to other appraisers.

Likewise, my reference to you reviewing MY work was just a rhetorical example. Not intended to be taken literally.

 

[djd09]

Nobody here begrudges your opinion.


Oh - and some absolutely do, as I've been cited as not being a self respecting appraiser for my opinion... so you might qualify that by saying that 'most' don't begrudge my opinion(s)...

They only read what they want. You will learn.

 

[CANative]

Page 2:

The income approach was considered but not completed. The cost approach was completed. See Page 3 for comments on each approach. The sales comparison approach is the best method of valuing residential property as it is a direct reflection of market activity. Range of pricing for similar properties is $550,000 (±) to $575,000. Adjusted indication range is $572k (±) to $580k. Bracket ($572k) given most consideration and rounded to $575k based on subjects favorable features.

Page 3:

Notes on the Cost Approach:
Land value developed using the sales comparison method. See exhibit addendum for land sales analyzed and comments below. Building costs estimated using the Marshall & Swift Cost Handbook (online - SwiftEstimator) for a good quality, two story residential structure. Effective age of 10 to 12 years; extended life method used to estimate depreciation. Additional items included a 4-stall, prefabricated horse barn with 6-rail portable corral and roof. In addition there is a 12' x 36' prefabricated storage building (used as an artist studio) with a small wood deck and shed roof. I have used the cost tables and methods published by the California Board of Equalizations Handbook AH 534 (2019 v.) at pages 13 and 22. See exhibit addendum. The cost approach is most reliable when the improvements are proposed or new, and this reliability can suffer as the age of the improvements increases due to difficulty in estimating depreciation from all sources. The cost approach resulted in a market value indication that is reasonbly similar to the market value indications in the Sales Comparison Approach.

Notes on the Income Approach:
The income approach was considered but was not necessary in developing credible assignment results for the intended use of this appraisal. Single family residential property on acreage is not typically purchased for it's ability to generate rental income.

Reconciliation of the sales comparison approach in the narrative comment section:

Reconciliation:
The range of market value indicators (sale prices after adjustments) is narrow given the quality and quantity of the available data. That range is $571,500 to about $580,000. The bracket is $572,000 which is similar to the MV indication from the cost approach. The subject has several favorable features including privacy, equestrian amenities, outdoor features, a larger size residence in good condition, and close proximity to the Russian River. I have given most consideration to the bracket of MV indications, rounded upward to $575,000 given the above listed features.

 

[George Hatch]

Nobody here begrudges your opinion.

Oh - and some absolutely do, as I've been cited as not being a self respecting appraiser for my opinion... so you might qualify that by saying that 'most' don't begrudge my opinion(s)...

These exchanges got a little personal, which is generally counterproductive to the substance of the discussion. When we're talking about each other we usually aren't taking about the subject. Disagreements with an opinion shouldn't be taken personally because we generally don't mean it personally - until it get's personal, that is. There are no two of us who see eye-to-eye on everything. That doesn't make it personal.

OTOH, this is Thunderdome, and part of the job description for appraisers is being extremely opinionated and willing to mount that vigorous defense.

 

[alebrewer]

Apologies, I thought I caught a reference about you being a chief appraiser and providing CE instruction to other appraisers.

Likewise, my reference to you reviewing MY work was just a rhetorical example. Not intended to be taken literally.

I AM a Chief Appraiser, and I HAVE taught CE (USPAP Instructor, but currently don't take the time to teach CE). Not sure how being a Chief Appraiser means that I would 'project' my 'opinions' on my peers? If you're asking whether I require revision when an appraiser includes the cost approach - of course not. I don't think my interpretation of Cert 4 is an opinion, but I'll grant that some may see it that way. Seems pretty clearly written to me, but on the pile of stuff I deal with, concerning myself with whether an appraiser develops the cost approach has zero import to me.