Appraising home after performing a review.

[Lee SW IL]

AAAAHHHHHHHHH CRAP!


I performed a review on a property last year 08/01 for an AMC which I agreed with. URAR 1004 Value was $115,000. I searched for the other comps, but everything looked good. Subject is 25 yrs old, but in very good condition. Home was compared to 2 newer homes, less than 5 years old, 1 comp similar in age. Age adjustments were made for the newer homes. No other sales appeared to be any better than what the previous appraiser used.

Well, this August I received a request for a 2055 Int. from the same AMC, different lender. Completed the report, it came in at $95,000. My report has 4 sales with very similar ages.

I really don't think the AMC realizes they sent me the review a year ago, I haven't mentioned it either of course. But, now I am now being requested to "look" at the appraisal from the 1st appraiser and comment.

I have so for wrote an addendum, but not sent it in. All I have stated is to support my report, which was thoroughly explained on my 2055 int

No real changes within the market, other than maybe the better sales.

Any ideas how to handle?

Thx

 

[John M. Parker]

They may be setting you up or just the luck of the draw.

Have seen two of the larger AMC's (First American and GAC)order 2055 In/Out rather than reviews in order to get three new comps, addendum and comments. Then they put yours beside original and see what they have. The cost for an in/out is about the same and they get a complete limited appraisal with a fresh signature.

I think I would have declined the order when I saw the address and have even seen one of the better AMC's even note on their orders that they want to be advised if you have previousely appraised and they re-assign.

 

[Mountain Man]

I seem to get a lot of 2055's in lue of a review too. I charge the same for a review as an appraisal, same work.

Like John, I would have told the client/requestor about my previous order, or turned the assignment down. But it is a little late to worry about that, live and learn. I guess your main defense is going to be the EXTERIOR, road side, field inspection. Or have properties become stagnant, and maybe even dropped a little?

 

[Ross (CO)]

Lee, ..... Most of us certainly have re-visited and re-appraised homes we have already done before. It's bound to happen. Your situation here is a different twist and I see you concern. However, your last statement line of your post answers your dilemna....."no real changes within the market, other than maybe the better sales". Clearly there HAS been a change in the market, even if that means a decline in values, and yes, now you just may have better sales. Last summer the market may not have offered that "perfect" set of comparables. This time around you should probably make a most-exhaustive search for comps and give more than 3 if you feel it is important. Do not forget to consider pending sales and active lists and show what is today's pulse of that local market. Be very solid in your ability to defend this current value. Yes, markets DO change, and that report and review of last August was pre-Sept. 11th('01) and pre-national-economic doldrums. You'll wrap it up just fine, I'm sure.

 

[Farm Gal]

Lee:
Among other things mentioned above, I would call the client YEAH! same AMC right AMC=Client!!, and request permission to disclose that you had done a review on X date of the original report report (toss in the yada yada about exterior view possible market change,etc but most particularly better/more recent sales!...) This gives you LEGAL permission to discuss that prior work product.

The fact that the original report appeared supported at the time based on the fact you didn't get in is NOT your problem. If the market supports a lower price due to 'whatever' inclusive of the fact you got into the house this time, you are still largely home free!

I wouldn't agonize, despite the comments on the forum, you are in NO USPAP difficulty whatsoever especially if you disclose WITH PERMISSION the prior work done in review. The only catch-22 I can see is in chosing to disclose or not disclose your prior review, and you CAN do that with the permission of your CLIENT: the original lender was an intended user, not a CLIENT...

See what I mean?

If you have any questions on this, shoot me a private message or e-mail and I will refer you to the discussion on USPAP I posted mid-summer, or send copies of my class material and notes from Danny Wiley Chair ASB...

Awkward, YES... Dangerous, probably not, as long as you cover your tail in this report: make it USPAP perfect, particularly with regard to LIMITING the intended user(s) and
specifically state a STRONG scope of work the purpose of the appraisal, who your client is (AMC), the INTENDED user (lender#2), and that any unintended use of THIS report by an unauthorized or unintended user is prohibited. Damages or concerns resulting from unauthorized use is at the sole liability of the unauthorized user.

Unauthorized use resulting in damages of any kind is NOT your problem.

Which is not to say you can't get sued anyway, but IF someone does, according to all my resources you should be protected, and if you are an AI dues paying member, Stephanie Coleman will stand behind you, or you can seek a statement from the AI, and or ASB about this matter.

Having attended the class I would state my first hand sources, but you should be able to do the same: that is one reason I posted the results of my class experience on this forum!!!! It is now entered as a matter of record that I and a whole bunch of other folks heard this from 'them' (credible sources) and if we act in our professional capacity on that advice we SHOULD be covered!

 

[Larry Lyke]

Lee --

You stumped me with the phrase in your opening paragraph: "I searched for the other comps, but everything looked good."

I'm basing my comments assuming your answer to that question is you found and researched those comps (i.e., none of the comps were fictitious).
.
If all was in order, the dilemma is solved. Be straigthforward in the mode of 'THEN WAS THEN' and 'NOW IS NOW.'

So, do what you are doing, and set about fashioning an appraisal to dovetail with your "foreknowledge" from the review.

Good luck.

 

[Restrain]

I definitely agree with Larry. That was then, this is now. I'm facing a similar problem with a home I looked at on Friday. Home sold for appx. $375,000, on a contract prior to 9/11, closed 12/01. Builder has slashed the prices so that the same home sold for $280,000 in 12/01 as a spec home, with the home capping at appx $320,000. Yes, the builders were getting that much profit. Now, I've got to tell the homeowner he's lost appx. $50K in equity. That was then, this is now.

 

[Farm Gal]

Yup:

Kinda like the stock market. :roll:

The value of marble and gold tone fixtures today is not what it may be tomorrow....

But the day after tomorrow it may be a LOT.

Timeing is everything, it helps if it is between the phone poles to begin with, and helps a whole lot if the appraiser is lucky enough to actually SEE the thing.

At elast he is not in the unfortunate position of haveing been insode on the first go-round :wink: and having to explain THAT!

 

[jtrotta]

I believe Roger & Larry have hit the mark; anything and any reason can cause the "lack of support" - thats why there is the option for the Client to request an update after 6 months. This enables them to kind of watch the market.

Be straight forward; that was then and this is now is the correct answer, you have no control over changing markets. Also, as interest rates drop, does not neccessarily mean that home values will increase; Buyers may not want to spend and may be looking at other differences that will sway their decision at this time.

I would not bring the past (review) :? - it has nothing to do with the current market and may cause you to write something you have no business being involved in. That could lead to a situation you do not want to be involved in 8O .

Good Luck

8)

 

[Karl]

This post couldn't have come at a better time. Doing an REO on a Manufactured Home, Did it last year came in As Is at 60,000 11 Months later it is at 48,000. I know they HATE seeing the WORD DECLINING but anybody got another word to use?