• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Appraising for over - list on a for purchase appraisal

Status
Not open for further replies.

Rob Lentz

Thread Starter
Junior Member
Joined
Nov 8, 2005
Professional Status
Certified General Appraiser
State
Michigan
I recently rec'd an order to appraise home in a soft/declining market.

Home sold a couple years ago for $78,000.

Owner gets in trouble, tries to sell for $85,000 - likely the sum of his mortgage payoff and selling costs.

House does not sell, expires.

Foreclosure.

Re-listed for $54,900 by a broker that specializes in foreclosures a month after other listing expired.

Approx. 90 days into listing a 2nd broker makes the offer for the home at $50k conventional mortgage.

The home is in a bit of disrepair (not horrible, but needs some cleaning, drywall patching, and the rear soffit needs to be repaired). So I use what I think are good comps - other REO properties which also had some need of repair. Sale prices are from $54900 to $57500 before adjustment. $49k-$54k after. I state that the list and sell price are within the range and call it $50k (purchase price) - send it out.

Broker buyer is looking for new comps to support a higher value. I know of two that are out there that could be used that are in the $75k range. He obviously wants them in there because he doesn't want to put any cash down on the deal - besides his earnest money deposit.

I may be too "gunshy", I don't know. I've had u/w call for 4th and 5th comps, adjust my values to the lower end of my adjusted range when the subject (in my opinion) was more similar to the upper end, and so on.

Please share your experiences that you think are relevant as to why, or why not to appraise for over the list/contract price. I am under the assumption that to do so would raise red flags and underwriting would generally NOT accept the appraisal, etc.

Thanks,
Rob
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
I try to simplify things by coming up with my own opinion of value. It's easier to support and defend than someone elses value.
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
Ditto Greg. What you need to be gunshy about is letting the "need to close the deal" affect your independent unbiased judgement.
 

Rob Lentz

Thread Starter
Junior Member
Joined
Nov 8, 2005
Professional Status
Certified General Appraiser
State
Michigan
Good Point

Greg,
My opinion is that they got a good deal...but I'm not sure underwriting really cares how much of a good deal I think they got - so I play conservative (my $50k opinion is conservative -I think there's room to be higher) to avoid U/W headaches. Which is really what my question is pertaining to - sometimes I feel that we're playing football (appraisers vs. underwriters) and that they won't share their play book with us - so we get a bit of the cart driving the horse syndrome going on. And appraisers are trying to guess what an underwriter might think about x or y scenarios. Thus my post, trying to hear from other appraisers that have had similar experiences with possible liquidation value pricing and this sticky situation where you could easily appraise a home over list/contract if you weren't afraid of what some underwriter in Chicago or New York might say about/do to your appraisal.

Rob
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
...
Please share your experiences that you think are relevant as to why, or why not to appraise for over the list/contract price. I am under the assumption that to do so would raise red flags and underwriting would generally NOT accept the appraisal, etc.
Thanks,
Rob



Appraise for the MV and let the chips fall where they may.

Address issues regarding the purchase price and terms of the contract of sale for your Subject AFTER you have arrived at an opinion of value.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Underwriters are not appraisers. They're compliance checkers. Not to pontificate but "conservative" sounds like "not accurate."
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Greg,
My opinion is that they got a good deal...but I'm not sure underwriting really cares how much of a good deal I think they got - so I play conservative (my $50k opinion is conservative -I think there's room to be higher) to avoid U/W headaches. Which is really what my question is pertaining to - sometimes I feel that we're playing football (appraisers vs. underwriters) and that they won't share their play book with us - so we get a bit of the cart driving the horse syndrome going on. And appraisers are trying to guess what an underwriter might think about x or y scenarios...
Rob

Rob, once you start playing that little game (your comments above) you will find that you will become more and more indecisive.

Of course there is always some range of adjusted prices as to where YOUR opinion of value might be, but do not base your opinion on what you suspect others might think of your opinion.

Your job is to develop and communicate a credible appraisal. Do this and life will be good.
Do otherwise and you'll drive yourself crazy.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
play conservative (my $50k opinion is conservative -I think there's room to be higher) to avoid U/W headaches
Either pushing value or "playing conservative" to avoid UW headaches begs the question of just whose opinion is it? And is it 'market value'? That is not to fail to recognize that we often have a fairly wide range of value within which to choose.
Nevertheless, I think I would just appraise it for what I thought it was worth and if it comes in below or above the sales price, I would explain why I thought it was a bargain / overpriced, etc.
What you are alluding to is one of the largest problems with the profession. In order to 'do' a report quickly for low dollars means that minimum inputs are necessary and writing a report to anticipate "problems" are a function of the Underwriting process. In other words, if we were adequately compensated then the appraiser could take time to explain a lot more than they normally do. Instead of explanations, the UW gets pat, trite, broilerplate replies which tell them nothing. As they try to box you into a corner and ask for more and more details, the result is paradigm appraising. You are no longer appraising the property, you are trying to create a compliance document which allows you to put this puppy to sleep in the shortest possible time without regard to what the value is...it is all about being a happy lapdog for the UW and the primary goal of finding market value becomes a secondary objective.
 

Rob Lentz

Thread Starter
Junior Member
Joined
Nov 8, 2005
Professional Status
Certified General Appraiser
State
Michigan
...we often have a fairly wide range of value within which to choose...
True!

I could - with the comps I have - call it $55k and explain why I think so. But in so doing, I realize that some U/W that is looking for "non-compliance" is likely to red flag this puppy. Or am I mistaken?

And, yes I agree with everything else you had to say. Appraisers have become the u/w's lapdog.

Rob
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
I would explain that the market sentiment is such that sellers are concerned about effecting a quick sale therefore, it appears the property sold below its actual market value and that may reflect a motivated seller willing to take less than market value rather than wait in an eroding market.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks