Considering filing complaint for lack of market conditions adjustment on stale comps

[alebrewer]

I am sure the state boards understand the problems and probably won't fault an appraiser unless he is completely egregious in his observations and calculations.

rrrrriiiiiigggggghhhhhttttttt......

 

[Zoe]

Thank you all for the lively discussion. I appreciate getting an appraiser's perspective on my situation and whether you agree with my frustration or not, your points are taken all the same.

Humor me, if you will, and consider a hypothetical counter scenario to illustrate my point. You are reviewing an appraisal with a FMV of $120K, which matches the SC price of $120K. Your comps are the same model as the subject, but all closed a year ago, all at $100K. This indicates the appraiser adjusted the comps up 20% for market conditions. You dig into the 1004MC and the appraiser states that prices, inventory, and DOM have been stable over the past year, but due to a small data set and variety of product sold they are characterizing the market as increasing. Huh, that doesn’t make sense, since the grid shows prices, inventory and DOM are unchanged in the form but maybe there’s some off sheet analysis that I’m missing.

So you dig into some market data. The median price in the county is the same as it was a year ago. The market area median price is the same as it was a year ago. In the specific neighborhood, you scatterplot closed sales prices over the past year for homes and condos with the same # of beds, baths and roughly same SF. Flat as a board. DOM follows the same pattern.

You find three paired sales of substitutable products in the neighborhood (remember, no model matches to the subject have sold in the past year). One pair shows that model A sold for $90K a year ago, and another model A yesterday for $90K. Another pair shows that model B sold for $120K a year ago, and another model B yesterday for $120K. The third is the exact same property sold a year ago for $100K and again yesterday for $100K.

How credible do you find the appraisal with a FMV of $120K?

It's not that simple. Your comparing data of properties that are not the best comparables. If you have better comparables, an ROV would be your best choice. That is a reconsideration of value to lender with your data.

 

[RCA]

rrrrriiiiiigggggghhhhhttttttt......

Ha, ha. Yea, OK. They have their quirks. In California they have a big thing about getting the zoning right.

Only nowawadays, you have these "special" zones, where the planning department can go in and improve whatever they think is appropriate; So, I'm talking about a single zone where you have a lot of townhouses and condos mixed in with light industrial and really anything else the planning department thinks is appropriate. Of course you have areas in California where you have half a dozen overlapping zones for environmental, hazard and planning issues. It goes from one extreme to another. Sometimes the zoning really is something you should be aware of; at other times you really have to question what worth it has. And, I guess one could argue that if a zone promises nothing then that becomes important to know as well.

So, OK, as I say, the real estate world keeps getting more complex, and the increasingly complex zoning in California is a good supporting argument.

 

[Zoe]

KISS principle. Keep it simple stupid. If you have data that supports a higher market value opinion, send it to your lender and ask them to request a reconsideration of value. Read the definition of market value first. Have you ever read the definition of market value in the appraisal?

 

[glenn walker]

Stale Comparables ! Now that's funny in SO CA that's a 30 day old sale : ) LOL

 

[George Hatch]

Forget about the OPs motivations for a moment and consider the facts being asserted by the one side of this dispute. Certainly there's another side to the story and that bears consideration as well. But IF the facts of the appraisal are as the OP says they are, and IF the appraiser didn't apply a market conditions adjustment to sales that entered into contract 10-12 months ago and closed 8-9 months ago and IF the appraisal report doesn't provide any support for that lack of adjustment beyond the point that these are the most recent sales then THE APPRAISAL needs to be cleaned up.

The work gets judged on its own merits (the appeal to reason), not on the fact that the person signing it is an appraiser (which would be the appeal to status or authority). Forget the appraiser and consider the appraisal and appraisal report.

If it was my report and someone was challenging my conclusions it would be in my own best interests to fix my problem - including going back to add the support I should have included in the first place if that's what it takes. It is not in my interests to allow to stand an appraisal report that is based on conclusions that are not supported and are contraindicated by the other sales data in the market involving the less directly comparable sales.

Direct comps or not, an opinion of the effects of the current market conditions can be developed for this situation. An adjustment of "0" is still a value. We don't get to just walk away because this analysis is going to require more work to complete. Or because we didn't get paid as much as we wanted to for doing the work. Or because we're busy. None of that is professional practice.

The appraiser isn't going to get significantly disciplined by the state over such a complaint; they're certainly not going to lose their license. But if the question was put to the appraiser and their response was limited to "I considered it but decided not to change it" without any further support then that's them allowing the state to do what it does. That's on the appraiser, not the complainant. The complainant is being forced by the appraiser to exercise their option of last resort. And regardless of what the value of the property actually is, there's no good reason for the appraiser to have allowed this situation to get to this point.

This OP has repeatedly acknowledged that they aren't an appraiser, but it's clear they have the capacity to research, identify and analyze specific market data for pricing trends such as appraisers do in their work, and it's clear that they're using some critical thinking in their analysis. Moreso than any other "layperson" that I can recall coming here and complaining about an appraisal. And that's saying something. So gaslighting them despite what they clearly are capable of doing is not helpful in this discussion.

IMO

 

[djd09]

Put yourself in the shoes of the appraiser. Would you (as the appraiser) consider it reasonable for a home buyer to potentially ruin your career over a single appraisal? If you (the appraiser) really don't understand valuation methodology - including support for making the determination of whether a market is appreciating, stable, or depreciating, then the answer should be yes (for you, the home buyer). If, however, you (the appraiser) believe the motivation to be one of spite or revenge, the answer should be no. Which is it? An honest desire for this appraiser to be better trained, or a motivation of revenge/spite for the appraisal not meeting your expectations?

and i thought the appraisal is was credible for everyone.

 

[alebrewer]

and i thought the appraisal is was credible for everyone.

It either is, or it isn't. If it isn't, remedial training might be in order. Heck - you might profit from some of that as well...

 

[alebrewer]

THE APPRAISAL needs to be cleaned up.

Don't disagree, but 'cleaned up' is quite different than having a state regulatory agency open an investigation.

 

[TMG]

To salvage the deal I had to come up with more cash

Was the appraisal contingency waived? I see a lot of buyers get into bidding wars, then when the property doesn't appraise, they feel left holding the bag.