I am right, right?

[ZZGAMAZZ]

Let's be honest here. Which produces a more credible appraisal and value:

1. Using a non comparable or a less comparable sale with that feature.

Or

2. Making an across the board adjustment that was market derived by match pairing, etc.

I would take #2 80% of the time.

The problem with #1 is this new cool term grid analysis or sensitivity analysis. Some appraisers are actually using the non comparable or the less comparable to make the adjustment via grid/sensitivity analysis. That is the problem.


Now if you want to use a non comparable to bracket (sorry in most cases not a hill worth dying on....the lenders are just trying to get it through) just put it as the last sale, State no weight was given and was only used for bracketing purposes. Derive the adjustment from the market via direct sales, match pairing, etc.

During an phone interview with FHA in response to my concerns about an alleged FHA appraisal error, I was told that EVERY FACTOR had to be braketed, per se, regardless whether the comparable has any bearing whatsoever on market reaction to the subject. [Same conversation when I was told that at least one comp needed to include a guest unit because the interior photo of the subject's non-permitted storage shed displayed a sleeping cot, which depicted functionality...]

 

[Mike Ault]

During an phone interview with FHA in response to my concerns about an alleged FHA appraisal error, I was told that EVERY FACTOR had to be braketed, per se, regardless whether the comparable has any bearing whatsoever on market reaction to the subject.

Unless that particular guidance can be found in HUD handbook 4000.1 (which it can't) then, "no they don't".

 

[shrubberyvaluation]

More data in the report, if given the proper amount of weight (including none) is not bad. Appraisals must be sufficient to enable the intended users to understand the appraisal. The intended user generally isn’t an appraiser, and they’re not an expert in quantitative comparison in every market they review. Sometimes they just need to see something analyzed that's overall superior to get comfortable. Sometimes in an ROV you throw the borrower’s sales on the grid to show them, despite these not being among the most similar sales, they don’t help your cause just because they have a higher price. Sometime when you have a pushy agent who knows the value isn’t there, you get their sales up front so you can analyze them in the report to pre-empt an ROV. This is the real world appraisers deal with every day. As long as it’s given proper weight, I really don’t see the issue.

Aside from your certifications if you use FNMA forums about using the best comparables. But like you say you have to be practical, and to be practical you have to go against the certs sometimes.

Also we have to make sure the intended user can understand the appraisal. So for most AMCs write it like you are talking to a 2 year old.

 

[CGinMN]

I selected and used comparable sales that are locationally, physically, and functionally the most similar to the subject property.

Nothing about this prohibits analyzing sales that don’t meet the certification.

 

[shrubberyvaluation]

I selected and used comparable sales that are locationally, physically, and functionally the most similar to the subject property.

Nothing about this prohibits analyzing sales that don’t meet the certification.

It is ambiguous as is a lot of things so they can be used to hang you later if needed. It could be argued there are better comps locationally, physically, and functionally than that sale in a different market that is double the GLA to bracket a pool. Or that sale that sold for 50% more you added in to show how outrageous the ROV is.

 

[J Grant]

I selected and used comparable sales that are locationally, physically, and functionally the most similar to the subject property.

Nothing about this prohibits analyzing sales that don’t meet the certification.

As close to prohibited in intention -signing we did X, and instead of doing Y is misleading.

We sign and certify that we used comparable sales that are locationally, physically, and functionally the most similar to the subject property. Thus if we ignore those sales and cherry-pick less similar sales, it opens the door to the appraisal being challenged .

Of course with less conforming properties the most similar can have a wider range but they still ar more similar than the others choices-

 

[NC Appraising]

Is there a difference between a sale and a comparable sale?

Would you consider ranch and a split level to be comparable?

How about a waterfront home and a interior non water front home?

Of course they are not. Appraisers seem to be very wishy washy on what a comparable sale is and will bend the rules when it suits them. Yes, that includes me.

The things we do to make lenders, AMCs, FHA, gses and us happy.

 

[Surf Cat]

Is there a difference between a sale and a comparable sale?

Would you consider ranch and a split level to be comparable?

How about a waterfront home and a interior non water front home?

Of course they are not. Appraisers seem to be very wishy washy on what a comparable sale is and will bend the rules when it suits them. Yes, that includes me.

The things we do to make lenders, AMCs, FHA, gses and us happy.

Sometimes..... you just have "no choice" but to use "the sale" as a "comparable sale". Sometimes, you have to use the "overall market trend" as opposed to the competing sales trend.

It's like creating Frankenstein....

 

[TerryRohrer]

Is there a difference between a sale and a comparable sale?

Would you consider ranch and a split level to be comparable?

How about a waterfront home and a interior non water front home?

Of course they are not. Appraisers seem to be very wishy washy on what a comparable sale is and will bend the rules when it suits them. Yes, that includes me.

The things we do to make lenders, AMCs, FHA, gses and us happy.

There are no properties that we are aware of that exist in a universe by themselves. Many appraisers believe there is no relationship between the prices and values of homes that are not nearly identical, or "comparable" (without a definition) to one another and create artificial measures like style to assert a conclusion they have never tested. How could a 1950s ranch and a 1950s split-level of the same size and quality, similarly maintained and updated, and located beside one another, not be comparable to and competitive with one another? It is rather easy to test, and I do so routinely, and never find a defensible difference. Yet, every day, I see appraisers claiming they are not comparable, although I have never had anyone explain how they arrived at that conclusion. There could be a difference in value, but if that can be determined, then the difference can be adjusted for. But if you don't do the work, you are just assuming they are not comparable. That way, you don't have to explain to anyone that different styles don't matter and don't impact value, and don't have to actually know whether or not they are comparable and competitive with one another. The fact is that within a given geographic area, the prices and values of all properties are related to the prices and values of other properties in the same area. It is our job to measure how, and how that impacts values.

 

[NC Appraising]

Sometimes..... you just have "no choice" but to use "the sale" as a "comparable sale". Sometimes, you have to use the "overall market trend" as opposed to the competing sales trend.

It's like creating Frankenstein....

FHA and the gses need to stay in there lane or rewrite the certifications that we sign.

I have adequate comparable market data to develop a reliable sales comparison approach for this appraisal assignment. I further certify that I considered the cost and income approaches to value but did not develop them, unless otherwise indicated in this report.

They were never ment to lend on everything....this is why appraisals can vary greatly from one another....because you didn't have adequate comparable market data.

They need to bring back the stop button...instead of putting all of the weight on the appraiser to make it work...stop lending on everything.

There is a reason why they have that certification. develop a reliable sales comparison approach....no you don't. You have sales that you adjusted and you put a number on it....

Good watch.