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Bad advice from Fannie--"Multiple Parcels" from Dec. 2019 'Appraiser Update'

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George Hatch said:
I completely believe what happened on Garfield. Nobody (apart from the 2016 broker) bothered to compare the A properties to the B properties so they valued Garfield as an A based on the unfounded assumption that A=B. Which may or may not be similar on the purely accidental and coincidental basis.

As for the checkbox, I keep telling you; the checkbox works for me, not Fannie. And regardless how I checked the box I would proceed to clarify exactly what my opinion of HBU is in the report in a manner that nobody would be able to misunderstand.

As for the question of whether its OK to appraise a B property as if it were an A property, the answer is no - it isn't. However, it may be (and in that market probably is) necessary to use A properties as comps and then *consider and develop any applicable adjustments* that may be necessary to get to a supported opinion of the value of this B type property. That adjustment might be a "+", a "-", or an "="; I don't know, and I don't assume. That's an opinion to be developed, not an assumption to make.


No matter what, a "B" property is not exactly the same thing as an "A" property. Saying it is won't make it so, and neither will "Fannie will accept" make it so.
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I think you are conflating most profitable with best interest. Your broker tells you that you can get way more money by selling the lots separately. But she also tells you that the median DOM for SFR in Carmichael is 14 days and the median DOM for lots is 75 days. She also tells you that 5% of SFR listings end up expired, but 50% of lot listings end up expired. Real numbers btw. How does the typical seller react to this information?
 
Stop saying HBU analysis excludes consideration of what people value. It doesn't. We measure the market's reaction to these attributes. All of them. If you think otherwise then how would you even be capable of valuing a home?

Moreover, as appraisers, it doesn't matter to our work how *we* would personally react to a given attribute. I would not pay for a view amenity or a house that's larger than I need (which ain't much). However, as a professional appraiser I recognize that most everyone else does so that's why I take those reactions so seriously when such conditions are present. "I" don't have to desire the larger lot in order to recognize that "you" and most other buyers in your market area will value the larger lot.

Homes serve multiple needs, the emotional needs being right out front. What other utility does a view amenity or a tasteful design serve but an emotional need? Not even you can deny that. And it should be self-evident - even to your entrenched position on this issue - that if the market participants can value a view amenity (which they do) and we can isolate that reaction (which we do all the time) then we can do the same for every other fuzzy. Subject to whatever those reactions really are in among these market participants.

See, this is why I never ask brokers what they think, and why - based on my personal exposure to thousands of appraisers - I have come to believe that people who come up in SFR sales usually don't make good appraisers. If you can't demonstrate the value of something in the market data then what does that mean?

In God We Trust, All Others Bring Data.
 
Andrei Fin said:
I think you are conflating most profitable with best interest. Your broker tells you that you can get way more money by selling the lots separately. But she also tells you that the median DOM for SFR in Carmichael is 14 days and the median DOM for lots is 75 days. She also tells you that 5% of SFR listings end up expired, but 50% of lot listings end up expired. Real numbers btw. How does the typical seller react to this information?
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How would you know, unless you actively looked for those "B" transactions? Which after all these weeks you still haven't done. I didn't appraise the property and I don't have the data it takes to find the B transactions but I have still found more than you have. Not because I'm somehow better equipped to do it (I'm not) but because I was willing to make an attempt that you apparently are unwilling to make.

If you look first and then develop the opinion based on the available info then that's what makes the opinion credible. If you don't look but opine anyway then that's what makes it not-credible.

We're professional appraisers. The judgement or opinion of what these buyers would do is supposed to come *after* the empirical analysis of the datasets involving those buyers and sellers. Not in lieu of that analysis and *especially* not by use of swapping in your own personal values as to what you would do as a buyer. Which is exactly how you have approached this issue since the outset. You have conflated the value and utility of this property to you as a buyer with the actions of the typical buyer and seller in those 2-parcel transactions.
 
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BTW, I would definitely sell the parcels separately if there was $100k more in it for me. Even if it took me 2 months longer to get it. And even though I've identified other situations where that has occurred, I still don't know if that's what is typical in the market because I'm not equipped to effectively search that market that way. Leastwise, not without searching for them manually and going back several years.
 
George Hatch said:
Stop saying HBU analysis excludes consideration of what people value. It doesn't. We measure the market's reaction to these attributes. All of them. If you think otherwise then how would you even be capable of valuing a home?

Moreover, as appraisers, it doesn't matter to our work how *we* would personally react to a given attribute. I would not pay for a view amenity or a house that's larger than I need (which ain't much). However, as a professional appraiser I recognize that most everyone else does so that's why I take those reactions so seriously when such conditions are present. "I" don't have to desire the larger lot in order to recognize that "you" and most other buyers in your market area will value the larger lot.

Homes serve multiple needs, the emotional needs being right out front. What other utility does a view amenity or a tasteful design serve but an emotional need? Not even you can deny that. And it should be self-evident - even to your entrenched position on this issue - that if the market participants can value a view amenity (which they do) and we can isolate that reaction (which we do all the time) then we can do the same for every other fuzzy. Subject to whatever those reactions really are in among these market participants.

See, this is why I never ask brokers what they think, and why - based on my personal exposure to thousands of appraisers - I have come to believe that people who come up in SFR sales usually don't make good appraisers. If you can't demonstrate the value of something in the market data then what does that mean?

In God We Trust, All Others Bring Data.
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I never said that about HBU analysis, I said check the box NO. HBU is only four tests, while market value is shown by the most relevant sales data, not the appraiser's opinion. You are confusing most profitable and most probable. You are dictating to the market instead of listening to the market. You are dictating to the client instead of listening to the client.

I was never asked to appraise the example, I simply showed you what determination the local buyers and sellers made twice.

Here's another red hot piece of data for you: 2627 La France Dr. Agent sez:

Lots of Potential !Zoned RD 5 , Seller says the corner lot can support a duplex and the left side will allow for a whole new house to be built.
 
Most probable is what is demonstrated by the actions of the many. "Well informed or well advised" is also demonstrated by the *actions* of the many. These benchmarks are relational (compared to who? or compared to what?), not fixed. That's why your allegations that appraisers work in terms of abstract absolutes is unfounded.

You might as well be arguing that the principle of substitution is obsolete.

If I looked for the "B" transactions to the best of my ability and reported that reaction based on the best available info then I would be doing my job. If I looked for "A" transactions and used those without any consideration at all of the "B" factor because that was expedient for me then I would not be doing my job.

If you get one of these assignment then do your job. Don't even think of doing less because you're not getting paid enough or because you don't know how.
 
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