How do you reply to these revision requests?

[sts2f1]

I'm one year in to being certified here in the middle Tennessee area and I'm starting to see this more and more as lenders come into the market. I have spoken with my old supervisor about this but I'm curious what other people with years of experience comment/reply to revision requests like these:

first revision request:
Please comment on the value estimate being lower than the sale price. Please comment as to how the quality of construction adjustments were derived. Please comment as to why no adjustments were applied for differences in condition. Sales #2 & #3 were over one mile distant and located in a different town than the subject. Please provide market data which demonstrates the locations are similar to the subject with no adjustments warranted.

second revision request:
Please further discuss your analysis of the purchase agreement. Given that this represents a meeting-of-the-mind of buyer and seller for the subject's characteristics, how was this factored in the opinion of subject value. Per MLS comments multiple offers were received, please advise if the appraiser was able to confirm multiple offers 3.) please expand commentary on your reconciliation to value.

Now all of these things/adjustments are summarized in my supplemental addendum (which is almost two full pages of commentary). I have never seen such ridiculous revision requests and it seems as if they want the report to be specific as opposed to a summary report and put all legal onus on the appraiser. I replied with a polite decline and a suggestion that if these revisions were needed the fee would need to be increased and reminded them about the summary requirements of USPAP. Anyone else dealing with this bs? They also requested comps that have no quality adjustments, and it feels like they're pushing a value.

Oh and I've had multiple lenders/underwriters send me specific comps and a request to comment as to why these comps were not considered. This seems to be a violation of FIRREA to me.

I think its best to learn from multiple old-heads in the business and fight the good fight against underwriters and lenders together!

 

[sputnam]

None of those are unusual requests. The one that disturbs me some is the implication that the contract should be treated as an additional comparable. Assuming you have properly done your market research, identified and quantified market reactions to differences, and correctly extracted adjustments... then the contract price should only be considered during reconciliation. For example... you have a contract price of $100,000. The adjusted sales prices of the comparables range from $96,000 to $102,000... then it is reasonable to conclude that the contract price is supported and to call $100,000 as your indication of value by Sales Comparison and your final opinion of value. Fact is, you aren't good enough to tell the difference between a $99,000 property and a $100,000 property. Neither am I... and I've been at this for a long time.

I think there are several reasons that ridiculous seeming revisions are requested. One is the underwriter or reviewer doesn't actually read your entire report. They may look for certain comments in certain places. If your summary of how you derived an adjust is there, then point it out to them. I know appraisers like to fight but, the easiest thing to do is to quote yourself, in bold this time, saying something like. 'As clearly stated on page 4 of the appraisal report....'.

Another reason that you get ridiculous revision requests might be... they don't really want to make the loan. Instead of telling the borrower that the property isn't considered good collateral for the loan they applied for, they want to blame it on you.

Another reason you might get 'ridicululous' revision requests might be... you didn't really do as good a job explaining as you think you did.

 

[Elliott]

My only rule is to answer the question in half the space it took for the UW to ask them. So I'm saying be succinct and to the point. Since it sounds like you've addressed them, then you get to say, "As indicated in the report, in the narrative under the Sales Comparison report....." which indicates to the UW he didn't really read the report.

 

[Dublin ohio]

My only rule is to answer the question in half the space it took for the UW to ask them. So I'm saying be succinct and to the point. Since it sounds like you've addressed them, then you get to say, "As indicated in the report, in the narrative under the Sales Comparison report....." which indicates to the UW he didn't really read the report.

RTFR

 

[alebrewer]

From Reg Z (bold added by me):
(3) Permitted actions. Examples of actions that do not violate paragraph (c)(1) or (c)(2) include:

(i) Asking a person that prepares a valuation to consider additional, appropriate property information, including information about comparable properties, to make or support a valuation;

 

[Salty]

I could care less about multiple offers or the contract price. I simply say it is not supported given available data. Show me a sold comp that supports it and I can add it to the report. I do think appraisers should show their work as to how adjustments were derived. Not derive an adjustment for a characteristic and use it across all property types for the next 10 years.

 

[alebrewer]

I could care less about multiple offers or the contract price. I simply say it is not supported given available data. Show me a sold comp that supports it and I can add it to the report.

Let's say your market is appreciating at 40% annually - as was the case in Austin last year (I understand it's cooled a bit now). That's a monthly increase of ~ 3.33%. Now, lets say the most recent sale in the neighborhood contracted 3 months ago, but sold last week. Do you apply date of sale adjustments to that sale? If so, do you apply them at 10% (which would be in line with market appreciation)?

The point is, that sold properties are, by definition, historic (meaning - not current) data. Whereas multiple offers at or above the contract price IS current MARKET data...

 

[Salty]

Let's say your market is appreciating at 40% annually - as was the case in Austin last year (I understand it's cooled a bit now). That's a monthly increase of ~ 3.33%. Now, lets say the most recent sale in the neighborhood contracted 3 months ago, but sold last week. Do you apply date of sale adjustments to that sale? If so, do you apply them at 10% (which would be in line with market appreciation)?

The point is, that sold properties are, by definition, historic (meaning - not current) data. Whereas multiple offers at or above the contract price IS current MARKET data...

yes this type of scenario has been discussed ad nauseum on other threads. No I would never ever ever opine a value opinion with out at least one SOLD sale to prove it . Never. If I have to do that, then it is a case of buyers acting irrational and perhaps we have undue influence. They can make up the difference in cash if they want then that comp will adjust the market. You see - I am as much about managing my own risk as well as I am my clients. Whenever i hear "meeting of the minds" I want to vomit. So many angry agents spout that crap and forget the full definition. Just because 5 people want to give me $20 for something does not mean its worth it. The value of the item should be corroborated outside of the transaction itself unless the item if so very rare and unique. Its a dangerous game appraising to the contract price.

 

[alebrewer]

yes this type of scenario has been discussed ad nauseum on other threads. No I would never ever ever opine a value opinion with out at least one SOLD sale to prove it . Never. If I have to do that, then it is a case of buyers acting irrational and perhaps we have undue influence. They can make up the difference in cash if they want then that comp will adjust the market. You see - I am as much about managing my own risk as well as I am my clients. Whenever i hear "meeting of the minds" I want to vomit. So many angry agents spout that crap and forget the full definition. Just because 5 people want to give me $20 for something does not mean its worth it. The value of the item should be corroborated outside of the transaction itself.

Then maybe you should use a historical effective date...

 

[J Grant]

Let's say your market is appreciating at 40% annually - as was the case in Austin last year (I understand it's cooled a bit now). That's a monthly increase of ~ 3.33%. Now, lets say the most recent sale in the neighborhood contracted 3 months ago, but sold last week. Do you apply date of sale adjustments to that sale? If so, do you apply them at 10% (which would be in line with market appreciation)?

The point is, that sold properties are, by definition, historic (meaning - not current) data. Whereas multiple offers at or above the contract price IS current MARKET data...

Yes, but are the multiple offers creating undue stimulus affecting price. MV is supposed to be a price unaffected by undue stimulus. so what it IS current market data , it is an auction type bid under pressure producing a highest price - if there are 5 offers and the Subject SC price highest "won", then the other 4 buyers did not think it was worth going so high. Are they current market data too?
sold properties are historic, so what, we apply market condition adjustments to them.