Unadjusted values don't bracket the subject's value

[shrubberyvaluation]

If I had a beater I'd use a REO sale or two even if the subject was otherwise undistressed. At that point its about condition and little else.

Why would it even matter if the subject is distressed or not?

 

[J Grant]

Nope! You just seem to not know the realities of Appraising REO's and sometimes Short sale. Oh, an Rural Properties there are issues with comp selection.

Wait...and there is this assignment quote I just received -I am not going to bother because my fee will be huge Refinance

9,999 Square Feet single family home is a 7 beds, 8.5 baths property. Sitting on a water front lot. And they want a 1007 Rent Schedule

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.

? I have appraised hundreds of REO's and many short sales. If we are appraising an REO property for market value, we find the most similar condition comps, which may or may not be REO-owned and derive an opinion of market value. for the subject. Same thing for a short sale. Same thing for a rural property where there are issues with comp selection. Same for a high-value estate home.. Same for a luxury penthouse - same for a plain vanilla tract townhouse.

Market value is market value - a model, based on what other similar properties sell for and then we adjust them as indicated - if the purpose is market value we should be doing things the same way and not changing the model around according to who owns a subject, or if it is a lower or higher value amount or the difficulty or ease of finding comps.

I take the same steps for a 200k starter home as for a 2 million $ waterfront home. Each one needs the most similar sales found as the comps- and sometimes it is harder to find good comps for the 200k house than for the 2 million dollar house -

 

[Surf Cat]

It's a strange time to be in appraising right now. Coming from extreme low apr's to higher than typical due to the FED raising the rates to fight inflation. This has put a kibosh on the market which in turn, makes appraisal assignments difficult due to the lack of comps.

Secondly, we have the introduction of "unlicensed" property data collectors, waivers, Add to the mix, a fast track to becoming an appraiser via PAREA implying that the appraisal process is not really all that important. Conversely, there's the requirement of ANSI, integrating linear regression, Excel spreadsheets and graphs to prove the Appraiser's market reaction adjustments, and one's opinion of value. One more ingredient in the mix is that since it is slow, especially with AMC work, the insulting fees.

My point to all this pertaining to the subject at hand, is the above is leading to this psychological "push / pull" when doing assignments.

Do you slam the most recent and relevant comparables in the report and throw in commentary stating that there's nothing better which is the reason all the comparables have across the board adjustments? I mean, they don't give a s*it anyway or why would they be doing waivers or hiring unlicensed PDC's? Plus, with the fees they're paying....they don't want the full regalia anyway.

OR

Do you go full old school and do what your mentor and hours of training have taught you to do? Go back 12, 24, 36 months and find that elusive beater. If not successful in doing that, do what Tom4value suggests in post #17? After all.... you are signing to those certifications.

I continue to do the latter but, I fully understand the former...

 

[Tom D]

if all the comps are nicer, priced higher, it looks like you are pushing a higher value. without a lower condition sale how did you prove your condition adjustment. i understand that sometimes you can't appraise the worst, or nicest, house because it's at a value range end. underwriters don't like all high, or all low comps, they assume you are hiding. or missed something.
it also depends on you relationship with that client. i have long time clients, they accept my explanation.

 

[Charles West]

Why would it even matter if the subject is distressed or not?

It doesn't matter because the subject's condition is the driver not the fact it isn't distressed.

 

[NJ Valuator]

Requesting the appraiser to find a sale whose unadjusted price brackets the subject's appraised value would require the appraiser to utilize price as a search criteria; however, price must never be used as a search criteria.

Comparables should not be chosen based on the anticipation of whether or not their original sale prices are going to bracket the appraised value.

There is no guideline that the appraised value must be within the range of the unadjusted sale prices of the comparables nor is there any rule that net adjustments cannot be all positive or negative.

 

[bnmappraisal]

This is the “Archie Bunker” of comments, technically right, but man, bad way of saying it!

There is misconception by AMCs, underwriters and even appraisers that the comps you use in the SC approach are the only source of support for adjustments. In this case, you have comments like, “find a comp, any comp, that is also a POS”. If you can find a comp, great. The danger is the “any comp” part.

The sales comparison grid is for comparable sales only. If you are stuck on, “any comp”, you will be providing “any sale” that is not comparable to the subject property, which according to USPAP is misleading.

So what do you do if you don’t have any sales of similar condition that are otherwise comparable? You apply an across the board condition adjustment to the comps you have. YIKES! “Did he just say, ‘across the board’ adjustment?”. Yes.

First, you find sale(s) of properties of similar condition in your market. They don’t have to be similar to your subject but they should be in your subject market. You then find comps to THAT property to extract a condition adjustment. It can be a dollar amount but if it is in a different value range than your subject, a percentage will work also. You then apply that adjustment to your comparables and then bracket for your value. For added support weigh in an actual cost for repairs.

Finally, BY ALL MEANS, explain in detail what you did! You put all that work into extracting the adjustment. You don’t want the reader to think the adjustment was POA!

Great reply Tom - especially (my bold)

 

[George Hatch]

The cert says "most similar". It doesn't mention bracketing.

 

[jay trotta]

Requesting the appraiser to find a sale whose unadjusted price brackets the subject's appraised value would require the appraiser to utilize price as a search criteria; however, price must never be used as a search criteria.

Comparables should not be chosen based on the anticipation of whether or not their original sale prices are going to bracket the appraised value.

There is no guideline that the appraised value must be within the range of the unadjusted sale prices of the comparables nor is there any rule that net adjustments cannot be all positive or negative.

IMO- we have a winner.

 

[J Grant]

Bracketing by features/physical components of a property has its place, and then later in the process, bracketing by price has a place as well, though the first is more important