Analysis Of Prior Sales: A Hidden Retrospective Appraisal?

[DWiley]

No...some appraisers take this "that's an appraisal" way too far. Work files and ethics are necessary for assignments. My house would sell for about $350k. I don't need a work file to tell you this. There is no client and I did not accept any assignment for that opinion

In a review assignment. If you say that the value opinion is "too low" or "too high,". That is an appraisal opinion. The same is true when you are analyzing a prior sale. Is this a big deal? That probably depends on whether you are sitting in front of a state board or not.

 

[jay trotta]

Thought for the day while a report is printing... Has anyone considered that when an appraiser analyzes a recent sale (or even listing) history of a subject property or even a comparable - a USPAP requirement - this creates a retrospective appraisal? Theoretically, it would require the same level of due diligence (i.e. separate relevant approaches) as any other value observation in the appraisal report, and arguably an authorized user could depend upon it (litigation purposes, primarily, extending to any comparables so-analyzed). I'm just thinking about this because I happen to be using a comparable that the appraisal client could potentially litigate over and they're the type...

Whether we'd be held responsible for the implied expanded scope is unlikely, but hiring a lawyer to explain it WOULD be.

OK, back to work everybody...

I would assume you are referencing the 12 Month History search ? Somewhere along the line I believe this was implemented for "Flipping" awareness; would be interesting to see the "Stats" on this since they implemented it, how many down & dirty Flippers have been caught ??

I see your point, but isn't this the ever expanding SOW, that is so similar to the Black Hole ?

 

[hastalavista]

I don't see the analysis of prior sales or listings of the subject constituting an appraisal.
The prior listing/sale may reveal something that otherwise may be undiscovered and might warrant consideration in the current analysis.
The common example in residential might be this:
The subject sold for $500k 9-months ago. It is now valued at $600k and the market has been relatively stable. Is this something that warrants consideration in the current valuation?
Certainly. The reason for that difference could be a no-brainer (subject previously sold as a fixer and is now totally renovated).
Or, the reason may not be discerned (there was no MLS listing for that sale and the current owners are trustees; their deceased sibling bought the house and they have no clue what the circumstances were back then).
Or, the reason may be something that could be easy for the appraiser to miss: the zoning has changed; 9-months ago, the site was only allowed to have one SFR improvement. Now, the site, by right, can have a detached accessory unit. Buyers are paying more for the ability to have an accessory unit. This may have been missed without questioning why the significant value change in such a short time.
But none of the above requires the appraiser to value the subject in the past.


(ouch; had a few typos in there! fixed now.)

 

[DWiley]

I agree, Denis. It is definitely NOT required, but many do stumble into it unintentionally.

 

[residentialguy]

In a review assignment. If you say that the value opinion is "too low" or "too high,". That is an appraisal opinion. The same is true when you are analyzing a prior sale. Is this a big deal? That probably depends on whether you are sitting in front of a state board or not.

Again, so.... There is no assignment. No wrong has been done.

edit: this is in regards to saying that an REO comp sold below market value. Obviously if you give opinion on the subject, then yes, all applies.

 

[Elliott]

I re-state the obvious. Any opines beyond that are speculative and probably not supportable, and honestly beyond the scope of the assignment. I've gotten the stips for explanation demanded by USPAP and I'd like to respond, "How stupid do you think I am?"

 

[DWiley]

Again, so.... There is no assignment. No wrong has been done.

Well, that's not what USPAP says, but you are free to make that choice and take the chance that a state board will never see it.

 

[residentialguy]

Please quote USPAP. Make sure you don't quote anything that uses the qualifier "appraisal assignment"

Thanks. Always willing to learn.

 

[DWiley]

Please quote USPAP. Make sure you don't quote anything that uses the qualifier "appraisal assignment"

Thanks. Always willing to learn.

Your position works for a review, but not for an appraisal. The language is different in the review standard. STD 3 applies to assignments. STDs 1 and 2 are not structured that way.

 

[residentialguy]

What's the first requirement of standard 1?
Identify the client and the other intended users.
When you have no client for that appraisal (the comp, not the subject), the standard does not apply.
Stand 1 & 2 deal with assignments, starting with SOW, which is defined as " the type and extent of research and analyses in an assignment. The client/intended user gives you an assignment on a property. Your opinion on that property (the subject) is an appraisal assignment and is held to standards 1 & 2. Your opinion on another property is not the assignment, therefore is can not be held to standards 1 & 2.