Appraisal Statistics

[J Grant]

Why did Fannie stick the word accurate on top of URAR ...We are aware USPAP does not refer to conclusions and opinions in terms of accuracy...but since the URAR which states assignment purpose is an "accurate" and adequately supported opinion of value, we are trying to come to terms with it.

I agree accuracy refers to facts , thus can be measured against facts. If a comp has a factual closed price of 150k but appraiser puts in error 130k on grid, it's a non factual inaccuracy ( and large enough error to affect results ). If appraiser by error stated 151k on grid it is still inaccurate,, but not a substantial enough error to materially affect results. A reviewer should distinguish between the two.

I agree the amount of the adjustments unless they are badly "off" may not affect outcome that much...assuming the choice of comps was good. With lousy comps...it does not matter if the data is accurately reported or adjustments good, the results will be lousy

The definition of accurate also references truth. An appraisal can be otherwise error free and mathematically perfect ;but if an essential truth is ignored /presented in such a manner as to be misleading , then results will still stink.

 

[J Grant]

Let me switch gears on this a little. Value conclusions are not the only opinions that show up in an appraisal report.

Would you want a reader to measure your opinion of HBU in terms or accurate or reasonable/credible?
Would you want a reader to measure your opinion of exposure time in terms of accurate or reasonable?
Would you want a reader to measure your opinion of site utility in terms of accurate or reasonable?

Conversely,
Would you want a reader to measure your summary on site zoning in terms of accurate or reasonable?
Would you want a reader to measure your summary on GLA size in terms of accurate or reasonable?
Would you want a reader to measure your summary of a lease or rental agreement in terms of accurate or reasonable?
There's a big role for accurate in appraising, but it's not the role that a lot of people are thinking it is.

Agree. Accurate, like anything else in appraisal has a role but the competence and perspective of appraiser should let the appraiser choose, when the role of accuracy is front stage, in the background, or off taking a stage break. An appraisal is like a symphony....the whole of the music is composed of different parts (instruments,) sometimes playing together, other times taking a solo turn. A good appraiser is like a good orchestra conductor...their ear is for the whole while at same time they are allowing for the individual instruments (such as accuracy ) to contribute .

 

[George Hatch]

Why did Fannie ignore many of the other criticisms of the URAR back during the exposure period? Because they're bankers and have only a superficial perspective of appraisal concepts. They are the ones who told appraisers that the requirements of the form drive the development process, which is exactly backwards of how it works on a conceptual basis. Among other stupidity. Their inventive interpretation of the meaning of Intended User as it relates to C#24 was so incorrect that they basically forced the ASB to issue a letter to clarify it, and then Fannie made the crack that the ASB didn't understand intended user and was wrong about it.

The worst part is that we TOLD them about these problems and why they're problems and they still went ahead anyway. Because it suited their purposes as bankers to do so.

How much of the addenda people put into their reports are aimed squarely at mitigating the problems that the forms either gloss over or create for the appraiser? Fannie is not your appraisal buddy and they never were.

Accuracy also goes to the facts asserted by the appraiser WRT their SOW, and including their selection and presentation of sales as being most similar. That's an assertion that can be tested for accuracy, and why "lousy comps" can be considered an inaccuracy on a more/less objective basis. .

 

[J Grant]

Were the URAR forms just developed by bankers or was some appraiser input there too?

There are part of the form that are terrific, other parts that are mediocre and others outright stink...

It could be the bankers put "accurate" as a benchmark for the opinion of MV as a peremptory legal ground they can employ if they want to pursue a lawsuit/damages against an appraiser for the appraisal...Makes it easier for them to go after appraiser since all they need to do is show some reasoning or dig up an error why the value was not "accurate" ... While we agree an opinion can not be " accurate" ,, an appraiser signed it was on URAR ...gives them ammunition if they want to use it

 

[George Hatch]

Like I said, they had plenty of instruction about the problems they were creating for appraisers and they only corrected some of them.

As for their priorities that much should be self-evident. Fannie is not now and has never been an appraisal entity, and should never have been regarded an an authority on appraisal practice except to the extent that they have their own underwriting guidelines. Just like any other lender. We don't ignore the appraisal policies of our other users and by that measure should never ignore theirs, but by the same token we also shouldn't be taking appraisal instruction from them, either. Their own appraisers are employees who are trying to find the balance between the company's priorities and their obligations as appraisers - which is fine for an employee; but not exactly what you want when it comes to putting the abstracts of appraising first.


Getting back to what Fannie is trying to do, I think that if you apply "accurate" as a measure of results too literally you are actually moving AWAY from what will be meaningful to their intended use rather than in furtherance of it. So even though I'm critical of appraisers citing Fannie as an appraisal reference, I still want appraisers to do the best they can in rendering appraisal services in that manner that will be "meaningful and not misleading to intended users" that we assert in our professional standards.

 

[Deleted member 130081]

While appraisers love to split the hairs of definitions and apply context (as maybe should be the case for everyone), most regular people do not. This is why citing a dictionary definition and then standing by it as the most appropriate, may not be appropriate (where is Eli when you need him?), because public trust is important. Therefore, IMO, it makes the most sense to interpret and apply certain things as the public likely would. In the case of the word accurate, I don't think too many people view this word in an abstract or subjective way. Rather, I think people relate accurate to precise and/or as an absolute. For those reasons, I don't think the word accurate belongs in appraisal, expect maybe to explain how what we do is in fact not accurate, by common understanding of the term. My mother who was an English teacher loved to say "A dictionary is out of date the day it goes to print.".

 

[Deleted member 130081]

Hmmm. I think I have some bad news for you. It's this.
1. Assuming you know all the features in a subject and its comps that contribute to value and
2. Assuming that you have accurate data on the features as either numeric amounts or string values (e.g. "C1", "C2", "C3", ..., for condition).
3. If you can find a set of adjustments that bring all adjusted comp sales prices to the same amount.
4. Then you have an "accurate" value. You have the one and only value.

Now, understand, once you have all adjusted sales prices equal, you can go back into your numbers, twiddle around and find that you can raise some adjustments and lower others and still get the adjusted totals to be equal. Adjustments can offset each other. But, you will wind up with the same adjusted value!

So, in essence you have an accurate price estimate if you can get all your adjusted totals equal, given assumptions #1 and #2 - and you have all the relevant comps for the subject.

Of course, nowadays assumptions 1 and 2 are rarely true. Yet, we keep getting closer. The AVMs keep getting closer. The appraiser still has the advantage that he has feet on the ground and the "human factor". Honestly, it will be some time before the AVMs get close to that. Yet, the actors who determine price, the seller, buyer, broker, agent, underwriter, appraiser and so on, have their limitations and tend to simplify things to match their own simplified opinions of value.

But, the point is, if 20 appraisers appraise the same house, using the same criteria (features) and data, then we can argue that the appraiser with the closest set of adjusted comparable sales prices has the most accurate value.

And, we don't need to concern ourselves with all features, but only those that are important across a significant number of potential buyers. For example, if there is only one potential buyer interested in black everything, then who cares?

So, conclusion, if I use my MARS or other regression tool and consistently pull in tighter comps than another appraiser, then I have an advantage. That's going to be a fact that the reviewers are going to have to contend with despite other things in the report they might disagree with. Also to note, if I can keep the rational for my adjustments out of the report and away from the purview of the AVM companies, so much the better. But of course, you might not get away with that. - Depends on intended users ( Read Ted Whitmer excellent article "Applying USPAP Fairly in Review" in the latest "Working RE".)

I have no idea what you mean by bad news, unless you are talking about how you continue to fail to see the flaws in your analysis, and how I might not like that. I'll say it real simple, your analysis drowns in the number of assumptions made. If you want to keep on keepin' on making all those assumptions and calling it credible, fine. How about I come to your house, throw a can of paint on the wall and call it painted? Can't argue I painted your house right? Now pay me. LOL. Peace out dude.

 

[George Hatch]

All modes of RE analyses will have to include assumptions. By itself, that's not necessarily a problem. Some assignments and modes of analyses simply employ more assumptions that others.

There's a reason we use a different level of data qualification when we are taking an appraisal report to court than we do when we're submitting it for use in a mortgage transaction. Or when the assignment conditions involve an exterior-only inspection with no measuring; or a desktop valuation with either no physical inspection by anyone or else a 3rd party inspection by a non-appraiser. This is one reason the SOWR explicitly states that credibility is always measured within the context of intended use. And not based on some arbitrary and fixed benchmark that is isolated from the context of the intended use.

This issue goes straight back to the question of whose expectations the appraiser is trying to meet, and how an appraiser would be able to identify what it takes to meet those expectations.

 

[glenn walker]

Done !

 

[Terrel L. Shields]

As for their priorities that much should be self-evident. Fannie is not now and has never been an appraisal entity, and should never have been regarded an an authority on

Correct me if I am wrong but when I came in this business in 1992, wasn't the form an FHA developed form? Like 1988 or 1986 age?