Appraised value different from sales comparison value.

[mjcrodgers]

I am not sure if this is an issue or not as I have never seen it. Doing a field review and the appraisal I am reviewing, which is an SFR/1004, has an appraised market value of $470,000, a sales comparison value of $500,000 and a cost approach of $499,000. $470,000 looks about right and $500,000 seems a little high. I have never seen the market value and the sales comparison value differ on a 1004, but than again Im not sure if it is an issue. The property is a typical SFR with plenty of comps to chose from.

 

[CANative]

Have you read the entire report? What does it say?

 

[Tobias Olney]

Seems weird. I can see allowing other approaches of value to influence the value opinion such that you wind up with a different value from the sales comparison approach. But both cost approach and sales comp approach came in 30k higher (income approach presumably not developed or deemed necessary).

Unless there is some prose somewhere explaining this, I suspect the original appraiser intended to opine $500k, but forgot to change the value field and left whatever was in there before from the previous appraisal he used as a starting point.

Aren't appraisal forensics fun?

 

[Fred]

Aren't appraisal forensics fun?

I thought forensics meant trials and evidence.

I don't review residential appraisals (well, except the ones people send asking for help), but I'd say there are lapses in complying with the most basic standards: Std 1 (not credible, because the state results do not jibe with the results produced by the analysis) and Std 2 (lack of sufficient information for the intended user - through its reviewer - to understand the report).

 

[Mike Kennedy]

1. Cloning Error - forgot to change the value from prior report - too busy skipping to the bank.

OR

2. the "bullesye" was given, the "bullseye" was hit - ta hell with the facts.......... then ............ see #1.

 

[Fred]

1. Cloning Error - forgot to change the value from prior report - too busy skipping to the bank.

OR

2. the "bullesye" was given, the "bullseye" was hit - ta hell with the facts.......... then ............ see #1.

Or entered final value at desired level and then didn't quite choose and adjust sales to match.

 

[mjcrodgers]

I read it again and can't find an expination for this anywhere. Actually it says that the most weight was given to the sale comparison approach.

 

[KYLECODY]

Really sounds like a typo. If not just do what reviewers do, come to your own opinion of value and explain why. He cant pull his final opinion of value from a magic bag, it has to come from somewhere.

 

[Mike Kennedy]

Simple Review Question: Is the STATED final value opinion adequately supported by the approaches considered and the approach which most weight was placed on??

No.

Next.

 

[Mile High Trout]

3 approaches = checks & balances

Mike. The three approaches to value oftentimes do not match up on a final appraisal. Many lenders & institutions insist that they should, but they are incorrect. The cost approach should ring in higher than the market approach, in a declining / distressed market. The cost approach should come in lower in a rising / bubble market. Land value should fluctuate up and down, to somewhat align these numbers, but they are only the same in a truly stable market.
The cost approach is an important benchmark value to indicate runaway or depressed markets. Marshall & Swift uses benchmark estimates to determine average building costs. If your subject home is outside of these ranges, that tells you the market is fluctuating, & land value is on the move, along with actual home valuation (not necessarily building costs). In many distressed markets, an income approach may yeild the highest value, as absorbtion rates increase for rentals, & decrease for private homes.
The cost approach should never be undeveloped, because it is a very important check to value, with every appraisal. An appraisal with no cost approach is always a sign of appraiser overconfidence, or incompetence. If you come up with two different figures, you must decide on one, & talk about that reasoning in your reconcilliation. The market approach is most relevent, & the cost approach may indicate to you weather a liberal or conservative approach to valuation is warranted. To adjust the land value to more closely align these numbers should yeild the most consistent results, & keep your provider happy.

Jeremy Hall
Jeremy Hall Appraisals
Thornton, CO

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