Appraised Value Below Contract Price

[Michigan CG]

Is it 5 o'clock somewhere?

 

[Mr Rex]

Is it 5 o'clock somewhere?

I don't know, but I want some of what she is smoking.


Or perhaps a pitcher of the kookaid.

 

[J Grant]

"Analyzing the contract would be disclosing if it is arms length or not, any concessions or terms and if any concessions/cash backs/special terms impacts price, if a realtor was involved, if standard terms are present, number of pages, dates signed, any addendums .

No specific regulations state the extent or analysis, particulary as it involves relating market value opinion back to contract price." J.Grant.

How does one know if concessions impact the price unless one has a price with which to compare it that is unaffected by: finance concessions, undue stimulus, normal motivation, et cetera, etc.? How?

That price is the result of your valuation, the perfect tool by which to analyze the contract!

To give credit where credit is due, you do make a good point with this last one.

 

[Calvin the Airedale]

YOU are more amazing! Read the complete cert 18, which I bet you haven't done since participating in this thread.

See the section in it that says: "(or present anaylsis supporting) a predermined specific value.... the attainment of a specific result of a specific subsequent event (Such as approval of a pending mortgge application).

In other words, cert 18 goes beyond a statment that the appraiser did not have a predetermined value in mind, it says NOT to present an analysis supporting ...which an analysis endorsing a SC price as "reasonable", or a market value correlation would be.

Anyway, I have explained my position, that I think explaining, in a way that does not violate the certs or USPAP, a difference between MVO and SC price can be acceptable But it is certainly not required , as PP and Calvin keep trying to claim, nor is it required by USPAP to be part of the Contract analysis (which others in the thread have pointed out numerous times)

Given your interpretation, doesn't any valuation that happens to coincide with the sale price support a mortgage or further the sale transaction and therefore violate cert 18, whether you discuss it in contract analysis or not?

 

[J Grant]

Given your interpretation, doesn't any valuation that happens to coincide with the sale price support a mortgage or further the sale transaction and therefore violate cert 18, whether you discuss it in contract analysis or not?

No, of course not. Cert 18 specifically refers to an appraiser presenting an anaylsis in support of a predtermined value, or outcome, which is different than an appraiser developing a MVO that is the same as, or equivalent to, a SC price.

The fact that we are unbiased does not impact our MVO. When the data shows that the best supported point value is equal or equivalent to or exceeds a SC price, then as long as we were unbiased in developing our MVO, we did not violate cert 18.

 

[Calvin the Airedale]

No, of course not. Cert 18 specifically refers to an appraiser presenting an anaylsis in support of a predtermined value, or outcome, which is different than an appraiser developing a MVO that is the same as, or equivalent to, a SC price.

The fact that we are unbiased does not impact our MVO. When the data shows that the best supported point value is equal or equivalent to or exceeds a SC price, then as long as we were unbiased in developing our MVO, we did not violate cert 18.

But it must be predetermined because the sale price is stated on page 1, yet the value isn't reported till page 2!

Coincidence? I think not!

 

[J Grant]

Calvin, now you are arguing against your own position! (or maybe it is sarcasm/dry humor). I really need to get off this thread and do a report...

 

[CANative]

J... The SC represents a pending sale comp of the subject. It's the best comp you can get because it IS the subject. Treat it like a comp.

 

[Pittsburgh Pete]

YOU are more amazing! Read the complete cert 18, which I bet you haven't done since participating in this thread.

See the section in it that says: "(or present anaylsis supporting) a predermined specific value.... the attainment of a specific result of a specific subsequent event (Such as approval of a pending mortgge application).

In other words, cert 18 goes beyond a statment that the appraiser did not have a predetermined value in mind, it says NOT to present an analysis supporting ...which an analysis endorsing a SC price as "reasonable", or a market value correlation would be.

Anyway, I have explained my position, that I think explaining, in a way that does not violate the certs or USPAP, a difference between MVO and SC price can be acceptable But it is certainly not required , as PP and Calvin keep trying to claim, nor is it required by USPAP to be part of the Contract analysis (which others in the thread have pointed out numerous times)

Thoroughly Amazing!!!!!!!!

 

[Pittsburgh Pete]

PP, That is well written and on the face of it, I don't have an "issue" with what you wrote. My issue is more to ask why such a statement is even necessary for us to provide. Your MVO was 150k, the client can see that the SC is 158k, they can see the 8k as concessions disclosed on the contract anaysis section. They can't put it together?

In any event, imo, your very well written statement does not belong in the first part CS analysis , it belongs below the MVO development, perhaps as a narrative on the addendum.

Appraisers doubling back and being asked to provide this kind of explanation is relatively recent, few clients have not asked for it till now, why do you think that is?

Because as an appraiser of the property I am required (yes required) to analyze the SC. Given that I am an appraiser, it only makes sense to analyze the sales contract in the context of the appraisal process and conclusion/result of the appraisal.