"Quantifiable Market-Derived Methods" for adjustments required by FNMA/USPAP

[Dale Floyd]

It is certainly a combination of learning (course work, mentoring, etc.) and past experiences that result in one knowing how to apply the various techniques that can be used to support an adjustment - and that includes recognizing when the results are wonky (not to get too technical). But, it is the data and the analyses of the data that provides the support, not the past experience.

One can often re-use data and analyses from a prior assignment with similar elements. It is still the data and analyses that provides the support, not the experience of having done it.

Yes. I said that already. Experience in itself, is certainly not viable as the foundation for a fact driven analysis. (But nothing replaces experience either, whether we are talking about life altering surgery, or professional analysis opinions by somebody who has "been there and done that" for years.)

Experience "should" also recognize corrupt data, which abounds today. You've not been a Tennessee appraiser in decades, so you've not had reason to review how questionable some of the data is that spews from our MLS. The same data used in groupings to support many adjustments and is sent to the Billow and Fluff sites used by everybody, including the GSE's. Data that's often distorted by information we see all the time individually. GLA is often wrong - Concessions are not reported - Last minute buyer agent commissions added to the price at the 11th hour - Again, these things can be caught individually, but not in bulk data and it distorts many things.

 

[DWiley]

experience doesn't matter...then why do appraiser have to do a two year intern...it is kool aid pouring time

Who said experience does not matter? In fact, I said just the opposite....

"...past experiences that result in one knowing how to apply the various techniques that can be used to support an adjustment - and that includes recognizing when the results are wonky (not to get too technical)."

Experience matters, it just cannot be the actual basis for adjustment support. The support (the credibility) comes from that actual evidence and logic, not from simply having done it before.

 

[djd09]

Who said experience does not matter? In fact, I said just the opposite....

"...past experiences that result in one knowing how to apply the various techniques that can be used to support an adjustment - and that includes recognizing when the results are wonky (not to get too technical)."

Experience matters, it just cannot be the actual basis for adjustment support. The support (the credibility) comes from that actual evidence and logic, not from simply having done it before.

and how does the mortgage broker and the borg team up to make their adjustments...you can analyze fraud and waivers but they will never make sense

 

[Terrel L. Shields]

But, it is the data and the analyses of the data that provides the support, not the past experience.

The problem is the quality of the data. On a different forum one appraiser is complaining that appraisers are not turning in Realtors who don't report GROSS LIVING AREA and might include finished basements, etc. SO? Realtors are not subject to USPAP nor ANSI. And assessors measure different than ANSI. And "Heated Sq. Ft." which is what our MLSs use? That is not even defined as GLA.

So, we have to vet the records to estimate the GLA and that's often an educated guess unless you have actually measured it before.

 

[Joe Flacco]

The general message about better supported appraisals is good. But then the push of software being the solution is bad.

 

[Artemis Fowl]

ANSI GLA for subject but all comps are assessor measurements. That is a useless comparison. Like Terrell says, if you haven't measured the comp to ANSI...what's the point?
This never made sense to me.

 

[Joe Flacco]

And AVM / automated review of appraisal reports is retarded.

 

[Sadie]

You wouldn't expect that kind of range for anything kind of typical.

Depending on what the subject is, a 20% difference between two appraisals might not be an unreasonable expectation.

20% is a big range, I would expect more like a 10% range.

 

[Sadie]

I mean, I don't know what a $3-4 million property in that market is. In the market I work, that price range is pretty typical, and a 20% range would be unreasonable.

When the subject is better than anything that has sold in the neighborhood, then 20% range shouldn't be viewed as unreasonable. One common issue at the high-end is that if your property is better than anything in the neighborhood, you go to competing neighborhoods to find similar improvements. Then you can deal with the difference in the value of the land between the locations, but then you are still left with the unknown of if the property is over-improved for the location or specific lot. Just the fact that nothing has sold like it in the neighborhood isn't evidence of an over-improvement.

You can even look at real estate agents at the high-end. Maybe 50% of the time, they nail the price within 10%. The other 50% of the time, they might be off by 20%-50% from where they started. You have to be a magician to be right within 10% all the time.

If it is better than everything else that has sold is it an over improvement or has something better just not sold? In which case you might what to throw in a really dated sale so the reader knows its not an over improvement. f it is an over improvement, then your need to let your client know how much of an over improvement it is. If you are working for a lender, you are assisting them in determining the collateral value. A 20% deviation is huge if the loan goes south.

 

[Sadie]

Of course we use experience to determine market adjustments. Every profession out there uses experience in their field. I don’t really care what three letter DC bureaucrats who haven’t appraised a home in two decades say on the subject.

They can live in fantasy land if they want. They collect that big fat government check regardless The rest of us live in the real world.

Its what we use in addition to our experience. You run your data for what ever feature, etc. Then use your experience to decide how best to use your results. In your report you state the adjustment (or lack of adjustment) is based on regression analysis, market trend analysis, or whatever. I mean you don't just make stuff up because you think an adjustment needs (or doesn't need) to be made. Think about it.