Opinion of Value Below Comparables

[Retired-70]

By this, are we to understand that your LSR never has residuals?... Interesting.

MARS regression has residuals - and those are considered to be the measure of the value of all unmeasured (subjectively valued) features that did not go into the regression, such as condition, quality of construction, view, functional utility, aesthetics, etc.... IF you rank the sales by residual (Actual Sale Price - Estimated Sale Price), large to small, you will find that the nicest best quality most appealing homes have a very strong tendency to rank towards the top and the fixer-uppers at the bottom. Thus you can create a percentage score and relate it to the residual to get a a function that returns residual value based on the percentile score. Next, rank the subject in that list of residuals to find where it best fits, assign a score and then calculate a residual for it which you can add to its regression estimate to get a pretty darned accurate value conclusion.

 

[CGinMN]

That’s not exactly correct. It’s more like “I don’t have enough data to support/extract an exact number for a time adjustment but I can conclude the market is increasing.

Give me an example where data allows you to credibly conclude that market conditions are increasing over the relevant period, but it doesn't allow you to credibly derive a quantitative adjustment.

The use of qualitative analysis is a scope-related decision, it's not a stand-in for deriving support. And if you are extrapolating an adjustment, which is often needed for time adjustment since all the data sold before the subject, your adjusted range of value bears no relationship to the unquantified adjustment. It only bares a relationship to the [unquantified] difference between the comps, (i.e. the 3-9 month period).

 

[J Grant]

I’m not arguing that appraisers should be reconciling outside the adjusted range per se. My point is that reconciling from within the range when you have not quantified an adjustment, is putting a quantifiable limit on an adjustment that you didn't quantify. This type of qualitative analysis isn’t logical, especially when the element in question is greater or less than the comps (e.g. extrapolation), which is usually the case for date of sale/market conditions adjustments.


The logic here falls apart under basic scrutiny.

Six model match comps sold 3-9 months ago and the adjusted range is $245,000 to $260,000. Market values have been increasing, but since no model match sales from the development have sold since, I “can’t” quantify an adjustment. Instead, I’ll just reconcile to the upper end of the range at $260,000. The $265,000 contract isn’t supported.

The above is a pretty common scenario and rationale by appraisers… it’s a big-time fail. IMO because of the logic hole it results in an appraisal that isn’t credible.

That’s really all I have to say about it. If you don’t agree with me that’s ok!

sorry I missed the increasing part on my last post.

But my other comments still apply. The appraiser in above example ended their comp search at 6 model matches -etc If market was increasing the subject might be worth 260k , but it might be a OMV of 265k or 270 k. Would depend on listings and what else sold besides those 6 model matches

 

[Retired-70]

Give me an example where data allows you to credibly conclude that market conditions are increasing over the relevant period, but it doesn't allow you to credibly derive a quantitative adjustment.

The use of qualitative analysis is a scope-related decision, it's not a stand-in for deriving support. And if you are extrapolating an adjustment, which is often needed for time adjustment since all the data sold before the subject, your adjusted range of value bears no relationship to the unquantified adjustment. It only bares a relationship to the difference between the comps, (i.e. the 3-9 month period).

Adustments are simply the difference between feature values of the subject and sales comp. If, for example, you determine the value of the GLA for the subject is $500,000 and a particular comp is $550,000, then the adjustment is -$50,000 for the comp's GLA. The handicap most appraisers have to deal with is that they were taught to only directly deal with adjustments rather than values. The advantage of first calculating values - is that the values have to total the sale price. That is a very nice constraint, that will go a long way to keeping you out of trouble. But, then again, you need some code to do all that extra work. Too bad FNMA didn't put extra excolumns for feature value and automated the process for you. They are idiots of course.

I use R to automate the process. .... And my entire workflow is somewhat complex, to be sure.

 

[EddieB]

Thank you all for your inputs.

The STIP has been withdrawn with the following statement:

"Thank you so much for pointing those paragraphs out to me. I apologize for missing them. They are extremely detailed and certainly confirm the value. I sincerely appreciate your time if getting back to me."

Sounds like you convinced the underwriter. Now to satisfy your peers.

 

[Ariba]

Sounds like you convinced the underwriter. Now to satisfy your peers.

Satisfying appraiser on this forum is at the bottom of my to-do list, they don't pay the bills. Keeping the client happy is at the top of my list. Also, I consider very few of the appraisers on this forum to be my "Peer" It is impossible to satisfy what you call "Peers" on this forum. Most of the appraisers posting on the forum cannot think outside the box, and have no clue how to analyze anything. However, they can quote you regulations till dooms day and can check boxes on the appraisal report with the best of them. However, they lack common sense and cannot answer the most simple question.

Can you just imagine testifying in court or at a disciplinary hearing and stating that according to my "Peers" on the Appraiser Forum, and I am quoting them .............. ....... You might as well turn in your appraiser license now.

However, the forum is entertainment and you pick up a fresh perspective on an issue that you might not have considered and now and then you pick up a gold nugget.

 

[Dublin ohio]

Satisfying appraiser on this forum is at the bottom of my to-do list, they don't pay the bills. Keeping the client happy is at the top of my list. Also, I consider very few of the appraisers on this forum to be my "Peer" It is impossible to satisfy what you call "Peers" on this forum. Most of the appraisers posting on the forum cannot think outside the box, and have no clue how to analyze anything. However, they can quote you regulations till dooms day and can check boxes on the appraisal report with the best of them. However, they lack common sense and cannot answer the most simple question.

Can you just imagine testifying in court or at a disciplinary hearing and stating that according to my "Peers" on the Appraiser Forum, and I am quoting them .............. ....... You might as well turn in your appraiser license now.

However, the forum is entertainment and you pick up a fresh perspective on an issue that you might not have considered and now and then you pick up a gold nugget.

Must be the thin air.

 

[Ariba]

Must be the thin air.

No, it's the marijuana and the thin air. Maybe you should try some. Here is a simple question for you to answer, do you think that most of the appraisers posting on this forum are your "Peers'?.

 

[Overimprovement]

The irony of someone posting a question here they are stumped by, and then being incredulous and insulting against those who respond is truly precious and mind-boggling. And at the same time, strangely entertaining.

BTW, keeping the underwriter off your back is NOT the same as producing a credible, USPAP-compliant report. I wonder how a state board and Fannie would respond to an opined market value OUTSIDE of all adjusted comps.

 

[Ariba]

The irony of someone posting a question here they are stumped by, and then being incredulous and insulting against those who respond is truly precious and mind-boggling. And at the same time, strangely entertaining.

BTW, keeping the underwriter off your back is NOT the same as producing a credible, USPAP-compliant report. I wonder how a state board and Fannie would respond to an opined market value OUTSIDE of all adjusted comps.

This is what I posted: "However, the forum is entertainment and you pick up a fresh perspective on an issue that you might not have considered and now and then you pick up a gold nugget."

Sorry, you take offense to that.

Again, the same simple question, do you consider the appraisers posting on this forum your "Peers" Simple Yes or No