Across The Board Time Adjustments?

[J Grant]

You miss the point of having data that demonstrates there is a market condition change.

Did I? I don't believe I did...but it's possible!

 

[residentialguy]

I say Toe-Mot-Toe and you say Toe-May-Toe. If you want to consider a separate & distinct analysis as part of the 1004mc, that's your prerogative. I don't see it that way. In addition, looking at a differing analysis as a part of the 1004mc, helps continue the farce that the 1004mc has any value.

I also think the 1004MC is a piece of crap form....however, the form does say that we must provide support for those conclusions, regarding housing trends and overall market conditions. It also states "Summarize the above information as support for your conclusions in the Neighborhood section of the appraisal report form. If you used any additional information, such as an analysis of pending sales and/or expired and withdrawn listings, to formulate your conclusions, provide both an explanation and support for your conclusions." Therefore, any additional information is part of the 1004MC, which, btw, means Market Conditions that you've analyzed for your 1004 report.

We're on the same page in that it needs more analysis than just the form. If you were to say that the way the form is set up is misleading, therefore I have added additional analyses, I would be 100% behind you on that. But to say " the 1004mc is PROBABLY GOING TO BE MISLEADING"....now it's an appraiser issue. I know what you mean, but the devil is in the details because the 1004MC states that your additional comments are included. I would urge to to revamp your wording slightly. Not trying to pick on you, just trying to protect you.

 

[Riick]

What if the market appreciated from 12 months ago up till 3 months ago, but at the 3 month ago market stabilized? A sale that was negotiated after stable and closed last month may indeed not warrant a time adjustment when current market is stable

I'm wondering if anyone notified potential BUYERS that the market flattened, or headed down.

My experience over the last 40 years is that the number of Real Estate Agents that will inform a buyer of anything but a hot hot hot market, is, somewhere between Zero and None.

Are typical buyers truly well-informed by their Buyer's Agents? You remember that by definition they're supposed to be "well-informed, or well-advised" but what's the reality? How do they get that information, and when? Does Adam Smith's "Invisible Hand" tell the buyers what's going on *now*, in real-time, or does the information s-l-o-w-l-y trickle-in? Does the end of an increasing trend....drop like a stone, or taper off? ....and....Ditto -in reverse- for a decreasing trend.
("The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand.")

 

[timd354]

I also think the 1004MC is a piece of crap form

The 1004 MC is most definitely a piece of crap form although it did accomplish the basic purpose for which it was designed, which is to make appraisers provide at least some support for the their market trend conclusions since too many appraisers previously provided absolutely no support for their market trend conclusions. However, even though the 1004 MC is a piece of crap it is incumbent on the appraiser to supplement the data in the form with additional data and/or additional narrative explanation so that the appraisal report (including the 1004 MC form) will not be misleading to the intended user.

 

[Riick]

I also think the 1004MC is a piece of crap form....But to say " the 1004mc is PROBABLY GOING TO BE MISLEADING"....now it's an appraiser issue.

Not at my desk, and can't quote whats written, but I've gotten wily in my old age, and couch things in terms of may and probably. Key, is the problem of both satisfying Fannie's form, and satisfying USPAP - in not being misleading. The only way I've figured to serve two Masters is by doing a separate job for each (though you call it one job). Truth is, we're on the very same page. Peace

 

[J Grant]

I'm wondering if anyone notified potential BUYERS that the market flattened, or headed down.
My experience over the last 40 years is that the number of Real Estate Agents that will inform a buyer of anything but a hot hot hot market, is, somewhere between Zero and None.
Are typical buyers truly well-informed by their Buyer's Agents? You remember that by definition they're supposed to be "well-informed, or well-advised" but what's the reality? How do they get that information, and when? Does Adam Smith's "Invisible Hand" tell the buyers what's going on *now*, in real-time, or does the information s-l-o-w-l-y trickle-in? Does the end of an increasing trend....drop like a stone, or taper off? ....and....Ditto -in reverse- for a decreasing trend.
("The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand.")

That is why OUR opinion of market value is based on the Theoretical well informed and well advised (etc) buyer from the MV definition, NOT an actual individual buyer who may turn out to be not well informed or well advised . If a buyer is paying a high price now for a listing on advise of a RE agent that market is still HOT , when it s in fact cooling, or based their price on a ridiculous CMA from RE agent of all superior homes, that buyer may not be well informed or well advised...but OUR theoretical MV defined buyer is supposed to be making a prudent and knowledgeable decision based on being well advised /well informed.

 

[residentialguy]

(though you call it one job). Truth is, we're on the very same page. Peace

I don't call it one job, the form does. That's why a little tweaking of your comments (that you posted here) would better communicate what you mean. Peace.

 

[timd354]

Not at my desk, and can't quote whats written, but I've gotten wily in my old age, and couch things in terms of may and probably. Key, is the problem of both satisfying Fannie's form, and satisfying USPAP - in not being misleading. The only way I've figured to serve two Masters is by doing a separate job for each (though you call it one job). Truth is, we're on the very same page. Peace

Submitting an appraisal report with a statement that part of that appraisal report (in this case the 1004MC) is "probably going to be misleading" is very problematic and could lead to problems for you if anyone decided to make an issue of one of your appraisal reports. It certainly could be argued that if you believe that the information included in the 1004MC is misleading, then you had an obligation under USPAP to include whatever additional information/explanations are needed so that the information you provided is not misleading. If you actually did provide the additional information needed to supplement the 1004MC so that it is not misleading then the inclusion of the statement that the "1004MC is probably going to be misleading" is actually a false and misleading statement.

 

[residentialguy]

Here is an example of what I put in the 1004MC form


The data on the 1004MC, per instructions of the form, are strictly for comparable properties in the subject's neighborhood. All data for this form were similar arm's length of comparable sales of the subject and taken from MLS. However, due to the lack of comparable sales data of this micro market, it is not a reliable indicator of trends, thus should not be viewed as such. Fluctuations are often variances in quality, condition, view, etc., rather than an indicator of trend. The overall trends above reflect a broader analysis where numerous studies were performed to show the Micro and Macro market, including distressed sales and their relation to the market. These studies are found in the additional comments for the Neighborhood section on page 1 of this report. NOTE: Sales trends may be affected by seasonality or may be temporary, such as by artificial Government stimulus, etc. There is no guarantee that the current trend will retain its current course, nor is this a prediction of future market conditions. See additional comments.

 

[DARREN GODFREY]

To be clear, (since I was a major piranha in this discussion), my point to OP was about appraising to the effective date and that we are not to appraise "conservative" and use only closed sales to protect the market. This is not a locational or particular market issue. I stated that I have no way of knowing whether or not his assessment of the trend was correct, rather that if the market is increasing, then across the board adjustments are warranted.

You know , i don't have a problem with across the board adjustments per say, but an across the board time adjustment is in fact predicting a future value it would seem perhaps if it was used for an older comp it would make sense. What this appraiser did however was say that this property would sell for this much today IF the trend continued...what if he wrote the report at 11:59 and the fed bumped the rate up 2 full points by 12.

In my opinion a time adjustment is a sensitive thing...at least you last sale chronologically shouldn't have one.