Analysis Of Prior Sales: A Hidden Retrospective Appraisal?

[Peter LeQuire]

In this are we not haunted by the lack of clarification in what is meant by "analyze"?

 

[DWiley]

Why do you say one could never violate the Standards Rules? Of course you can, when you have an appraisal assignment. If you don't have an appraisal assignment to break, then no, rules don't apply. Rules are applied to appraisal assignments in 1 & 2. I highlighted in yellow just some of the example. They are not applied to an appraiser saying that some house is a REO and appeared to have sold below market value; no one ordered it, there is no client and no intended user relying on it. Sorry, but me saying that REOs typically sell below market value is not a mass appraisal. And to suggest as such, is a massive, non-supported error on your part.

Even if one accepted your argument (and I don't), it does not matter. You are analyzing a prior sale because you do have an assignment.

 

[residentialguy]

Yes, but my assignment is not to provide an appraisal on that sale, it's an assignment to provide an appraisal on the subject.

 

[Mr Rex]

Wow, appraisers that cant grasp the difference between an appraisal and an analysis of comparable sales... Who would have imagined?

 

[residentialguy]

Wow, appraisers that cant grasp the difference between an appraisal and an analysis of comparable sales... Who would have imagined?

You can have both at the same time. An appraisal is an opinion of value. When analyzing, you can find that it sold below market value because it was a distressed sale. that is both an analysis and an opinion of value. However, that analysis on that comp is not is an appraisal assignment. A client did not order an appraisal on that comp. That's merely an explanation of the conditions of the sale and it's affects. (ie analysis).

 

[J Grant]

I was under the impression if an appraiser offers a value opinion, they have done an appraisal, regardless of assignment (or lack of one).

An analysis need not include an opinion of value.

 

[J Grant]

When analyzing, you can find that it sold below market value because it was a distressed sale.

What you describe above is a retrospective appraisal. I know you disagree, but it is, because you state "it sold below market value" . Instead write that on prior sale date, subject sold for X$ because it was a distress sale ( and anything else you want to add, such purchased with cash no financing). That's it. You've analyzed prior sale without giving a value opinion on it.

 

[Eli]

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.

One way to avoid that sometimes is to say it was some other party's opinion that the property sold above or below market for such and such reason. For example the selling agent or seller or buyer (etc) indicated the property sold below or above market. Personal interviews are used for support on other things sometimes in order to provide support for an opinion of value. All the steps in the appraisal process have not been performed so that the appraiser can provide a retrospective opinion of value. That would be a long shot and I don't think the appraisal problem is defined. I think an attorney would have a hard time. I agree with you to be careful on the wording though so that it is not misleading.


On a side note, think about how TN brokers who are appraisers give price opinions (high, low, whatever) when they wear their broker hat, but appraisals when they wear their appraiser hat.

I realize you were referring to a review assignment, which would be a totally different situation than the OP posted.

 

[Peter LeQuire]

That a comparable's prior sale was a "distressed" sale is a fact: whether its price was the same as, greater than or less than its value is an opinion. Isn't the requirement to analyze the prior sale an assignment in and of itself?

The Duck Test would wind up calling that an appraisal. (if it walks like, quacks like, swims like............)

 

[DWiley]

The requirement is to analyze the sale, not to provide a retrospective appraisal My typical comments: "When the property sold in October 2015 it was listed in the local MLS system, and it was exposed to the market for 25 days before going under contract. There is no record of any special financing, and the sale appear to have been an arms-length transaction."

Now, some who use the term "arms-length" in the wrong way might fail to realize that that statement conveys no opinion of value, it merely reflects that there was no relationship between the buyer and the seller.

Another example - "The sale of the subject property in November 2015 was a cash sale by a bank, that acquired the property via a foreclosure action 3 years prior. After the purchase, by an investor, the home was extensively remodeled (see comments in IMPROVEMENTS section of this report) and re-listed for sale."