Being Told The Contract Price Of A Subject

[J Grant]

He did not ask specifically but I'll bet it's a res purchase.

The huge volume of res loans made and their consolidated ordering in the hands of few clients is what creates the problem. Seems you have no interest in learning about it and keep deflecting about it instead, or arguing to be contrary. If a commercial appraiser told me something about their end of the business and I personally did zero percent of that business I might consider what they say?

As far as false assumptions, it was the res housing loans and over inflated prices that crashed the economy with an estimated 40% of Americans underwater on their loans. Yeah, lowly residential did it, not commercial....because most Americans own residential properties , not commercial properties. Therefore when residential tanks it sends ripple effects through the whole economy. I would think the scale of lending on res side dwarfs that on commercial side.

 

[Mike Kennedy]

Definition of independent
(Entry 1 of 2)

1: not dependent: such as


https://www.merriam-webster.com/dictionary/independent

 

[Mike Kennedy]

P.S. https://appraisersforum.com/forums/threads/here-we-go-again.221646/

 

[Phil McDonald]

Currently about 20 percent of my business is residential mortgage work. A few years ago when demand was high and fees were very good about 50 percent of my work was residential mortgage work for about a year.

I don't believe that understanding that everyone will always act in their own interest is being obtuse, just the opposite. People are going to behave like that utilizing any method available to them and to believe that the answer is to just continue building protections may be a bit nieve.

Appraisers have been sounding this same horn for decades and the industry changed in response. I hope that all appraisers are enjoying this new AMC model more than the previous direct client model. This was the answer to that cry for protection. Appraisers got what they asked for.

Now the cry continues and eventually it will be answered. That will probably happen following the next market crash. What will that answer look like? As J Grant insightfully pointed out, in situations where a conflict of interest may exist those jobs are often government jobs. I believe that the next logical answer to this cry will be exactly that answer.

The legislative reaction in the next market crash may be the formation of the department if appraisers and to be a residential appraiser doing mortgage work you would need to become a government employee. Then appraisers will finally have that protection they have been crying for. No more skippies, no more number hitters, just a perfect answer to the cry from the appraisers. The bubble of protection for appraisers finally created as a department within the federal government.

Be careful what you ask for, you might just get it.

Maybe, that is what appraisers want and if that really would be appealing to appraisers then I may actually be obtuse for not being alert to that desire of appraisers.

In regards to my insight into where this cry of the appraiser may lead and sounding the warning alarm while promoting an alternative approach. That is actually the opposite of being obtuse.

 

[Mike Kennedy]

Clearly as appraisers we know the reasons and ISPAP mandate to analyze a SC price...but why would you need days to "get to the bottom of it? No matter the parties reasons , or lack of them, their price is their price.

Our market value opinion is our market value opinion. We consider their CS price and terms, but than it;s up to us how much relevance to give it. As far as "getting it right" about analyzing their SC ...we are doing it to reveal terms or atypical motivations ,other than that, there can be an unknown factor around a price.

Analyzing a S C price, assuming adequately done, is of less importance than the time we devote in an appraisal to getting our market opinion "right", ...aka credibly supported.

In an appraisal review , the reviewer is asked do they agree or disagree with the market value opinion , the reviewer is not asked whether they agree or disagree with the SC price.

For Good Reason. Market Value is extracted from OTHER sales of OTHER competitive, SUBSTITUTE, properties bought and sold by OTHER PARTIES.

Substitution: The principle of substitution states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution. The principle of substitution is the underlying principle for the direct sales comparison and cost approaches. For example, if there are two similar houses for sale in an area, the one with the lower asking price would normally be purchased first.

 

[J Grant]

Phil I like your idea for federal dept of appraising /making tax payer backed work a federal job or panel would be on the table..but unless there is a turn around of trends I can't picture it happening. ....

A simple option would be to make AMC;s into govt contracted firewall entities, rather than for profit lender affiliated companies. But I doubt that will happen either.

More likely will be a continued marginalization or elimination of appraisers . We did not ask for this AMC solution- we asked for consequences for lenders who pressured and a hotline for redress about it, neither of which came to pass.

What could have have been a viable solution (third party firewall) become so compromised by profit affiliation with lenders or lender ownership of AMC;s /modeled order departments, that things are as bad or worse now than before.
I appreciate your insight...

 

[Mike Garrett RAA]

Just what we don't need...a federal level of appraisal over-sight. Oh, wait, I think we already have that.

 

[Dallas Scott Wilke]

Where in this does he specifically refer to residential? False assumptions about the topic, where?
View attachment 38234

Your point is very valid. I did not mention Residential. But to clarify for future purposes, I WAS talking about residential.

 

[djd09]

the experiment would be to order two appraisals, one with the contract , one without. surely the results would speak the truth.

 

[glenn walker]

the experiment would be to order two appraisals, one with the contract , one without. surely the results would speak the truth.

There have been situations where -we have been involved where multiple appraisers were engaged in legal cases with no contract price and nobody allowed to discuss values with anyone. The results not only didn't speak the truth but the variances from low to high were as much as 25% and these were non-complex single family homes. On one BK case the judge threw up his hands and simply totaled them up and divided by four and that was the value used.

The common misconception by many loan production appraisers is the lowest value is the correct value and I have even encountered ones who bragged about their so called conservative approaches protect people from overpaying. The biggest problem is they inherently have either been improperly been trained or they develop a mindset that they actually start to believe they ( give or make value ) and those are the same ones we see on forums who brag and use words Ike I just killed another deal.

The hardest part I had when training newbies was pounding into their heads that appraisers don't make or give value to anything the market does. One of the most common statements made in reviews was the appraiser would defend his adjustments by saying he/she gave the third car garage an-extra $10,000 over the two car garages. Anyways most loan production appraisers are lost in the woods without a contract price.