Appraised Value Below Contract Price

[Calvin the Airedale]

Requirement to analysis the purchase contract never includes reconciling the purchase contract with the appraised value.

Period.

How so? Cause you say so? Fine, cite me sources that say as much. That seems to be the gist of the argument against my contentions.

I OTOH, have the practical witness of the explanations provided me by regulators and FNMA from days gone by as to what those folks expected or what would suffice to fulfill such obligations.

 

[Calvin the Airedale]

Calvin, that would depend upon whether or not the folks actually lending the money were held responsible if the loans went south. If they were, you can bet each and every loan would require an appraisal. If not, (you know, like it is now, with taxpayers being the ones actually held responsible for all the bad paper), then yes, nobody lending money would actually care. In fact, when those making the loans know they won't be held responsible, (like it is now), they will fight tooth and nail for the right to utilize alternative methods of asset valuation.

Your premise rest upon regulation, i.e. "that would depend upon whether or not the folks actually lending the money were held responsible if the loans went south." Thanks for making my point. We exist because of banking regulation, not in spite of it.

 

[gregb]

How so? Cause you say so? Fine, cite me sources that say as much. That seems to be the gist of the argument against my contentions.

I OTOH, have the practical witness of the explanations provided me by regulators and FNMA from days gone by as to what those folks expected or what would suffice to fulfill such obligations.

Calvin, just read the request: "Analyze the Purchase Contract"
Where does an analysis of the purchase contract stipulate adding in a discussion of the appraised value? I posted earlier that in the final reconciliation in the report, it would be prudent to discuss variances between the contract price and the concluded value. Are we just disagreeing where such discussion in the report it might take place?

 

[Rlong]

Seems funny that the actual contract price/offer of the actual subject (most similar comparable) is the only significantly relevant price data were suppose ignore/ don't analyze?

: ) Bob in Co

 

[gregb]

Seems funny that the actual contract price/offer of the actual subject (most similar comparable) is the only significantly relevant price data were suppose ignore/ don't analyze?

: ) Bob in Co

Funny why the subject does not suffice as the best comparable, who ever came up with a minimum of requiring three comparables not the subject?

 

[residentialguy]

What part is baloney?

That state appraisal boards don't hold such views as to appraiser's contract review obligations?

or, That using the MV as a standard by which to judge the reasonableness of the contract price in not a valid analytical tool?

Calvin is correct...state boards want a full analysis done.

DISCIPLINARY REPORT​

May 17, 2012

The Respondent did not analyze the agreement of sale, but only
listed facts that were in the contract such as sales price, date of the contract, and sales
concessions. There was not analysis as to the motivation of buyer or seller, no
consideration of whether both parties were well informed or advised, no analysis of
whether there was reasonable exposure to the open market or whether the price was​

influenced by special or creative financing.

 

[J Grant]

How so? Cause you say so? Fine, cite me sources that say as much. That seems to be the gist of the argument against my contentions.

Cert 18 is a source, as are the other certs (see below posts) In your board example, they addressed a lack of anaylizing some aspects of the contract, it said nothing about the appraiser not adressing why a CS price differed from the MVO.

 

[J Grant]

But when the client asks you to reconcile the difference between the SP and MV

Even if a client asks for a statement adressing why the SC price differs from the MVO, they are not asking the appraiser to "reconcile" the difference. That would oppose the purpose of the report, to develop an independent value opinion, and would be a violation of cert 18 , (see next post)

 

[J Grant]

From the URAR certifciations page:

18) "My employment and /or compensation for preforming this appraisal or any future or anticipated appraisalswas not condtioned on any agreement or understanding , written or otherwise, that I would report (or present analysis supporting ) a predetermined specific value, a predetermined minimum value, a range or direction in value, a value that favors the cause of any party, or the attainment of a specific result or occurence of a specific subsequent event (such as approval of a pending mortgage application)"

The above cert prohibits presenting an analysis supporting a pretermined specific value, would not a statement about reconciling the SC price and a MVO be doing that?

 

[J Grant]

Calvin, have you been trying to tell us in code, (cause that's the way it works), that the big guys, the regulators, the ones who bought us the bailouts, gave you insider knowledge that what they REALLY want is for appraisers to reconcile the MVO to the SC price? In other words, to support the SC price, as long as it is "reasonable"?

If this is what they want, why not come out and state it? Just remove cert 18, and the statement that purpose of the report is to derive an independent and unbiased value opinion.

Change it to, "Purpose of appraisal, to support the SC price." Then we would all be on the same page.

The method is simple and saves time. Find a random outlier high sale and put it on the grid to form the upper value range. Then, make a statement about how the SC price is within the adjusted range. Then, a statement about how you reconciled the MVO to the SC price, because the SC price is reasonable, since it is within the adjusted range. Bingo! Works every time, on every property, no matter what the SC is.

I could do three a day now with this method! Just tell the regulators to greenlight it and make it official, please?