Being Told The Contract Price Of A Subject

[J Grant]

That's why I think we should provide a value range and not an exact number. The lender can decide if they want to do the loan if the contract price falls within that range.

The lender DOES NOT want to decide the loan amount for liablity reasons, and it would not be solved by our providing a value range. As it stands now, we provide an exact number. A lender could decide to deny or approve a loan within a certain tolerance of that number ( say 3%). And guess what, they are allowed to do it ! And a few of them do. But mostly they refuse to do it.

That's the way it is for now in appraising, things might change in the future. Trust me if all we ever do is provide a value range and the lender or an analyst or Fannie picks the exact number we will be irrelevant and no longer needed. Any idiot with software can provide a value range and that is in fact what an AVM does with a confidence score around a number.

Just do a good job and consider the SC price but don';t let it drive the appraisal . An appraisal is not done to support a SC price . An appraisal is done to support a market value opinion. A pending SC price supports our market value opinion, not the other way around. The fact that the sC price supports a MV opinion is a reason to reconcile a MV at SC price when the two are equivalent.

 

[Eli]

No need to bracket the contract price. It is best for the unadjusted sales prices of the comparables bracket your MVO. That’s not always possible, but usually is.

 

[TRESinc]

When we are given the contract price of a subject for a Purchase Appraisal, and then asked to bracket that price in our comparables, does that not make us inherently bias toward a specific opinion of value?

i have never been asked to do this. ever.

 

[Overimprovement]

i have never been asked to do this. ever.

I missed this portion of the sentence in the OP. I've never been asked this either.

Is your supervisor or client asking you to bracket in this way? Either is wrong for different reasons, but if its your supervisor, you need to find a new one right now. That is clearly a USPAP violation. Moreso since they would be encouraging you to break USPAP as well, and setting you up to fail in your new profession!

We are to select the most similar comps to the subject, regardless of price.

 

[Dale Smalley]

Those price rules only apply to AMC's acting as advocates for the "deal" . Bracketing of the GLA and lot size however is considered as a good practice.

 

[jtinmichigan]

I've been thinking a lot about impartiality and how to best improve your chances of truly eliminating bias.

When we are given the contract price of a subject for a Purchase Appraisal, and then asked to bracket that price in our comparables, does that not make us inherently bias toward a specific opinion of value?

I much prefer when doing an appraisal without a preconceived notion of value. Even it it does make my job a little easier to know what price to look around. I would rather do a Market Analysis and see what similar properties have for $/sf and go off of that. I feel that is more unbiased.

Are there articles that discuss this? Do you guys have opinions on this? Does this actually violate USPAP by creating partiality?

I have been told to bracket the opinion of value but can't ever remember being told to bracket the sales price. The first part is fine, the second is an unacceptable assignment condition.

 

[Dallas Scott Wilke]

An appraisal is not done to support a SC price . An appraisal is done to support a market value opinion. A pending SC price supports our market value opinion, not the other way around. The fact that the sC price supports a MV opinion is a reason to reconcile a MV at SC price when the two are equivalent.

I like the way you put that. Thank you!

I think the biggest issue I have is that knowing a SC price at all already puts a bias in our head, however slight. I'm more focused on the psychology of that. It's similar to me telling you NOT to think about a cow. The very fact that I've said cow makes you think about a cow, if only a bit. I guess the best that we can do is to "act in an impartial manner" to the best of our abilities, as much as humanly possible.

My own bias is shading this opinion, though, of course, too. LOL.

 

[Evincere]

No need to bracket the contract price. It is best for the unadjusted sales prices of the comparables bracket your MVO. That’s not always possible, but usually is.

If comps are good and truly comparable the CP should fall within the adj sales bracket. Not always..but usually. If they are really good comps the CP will be bracketed by both SP and adjusted values

 

[J Grant]

I like the way you put that. Thank you!
I think the biggest issue I have is that knowing a SC price at all already puts a bias in our head, however slight. I'm more focused on the psychology of that. It's similar to me telling you NOT to think about a cow. The very fact that I've said cow makes you think about a cow, if only a bit. I guess the best that we can do is to "act in an impartial manner" to the best of our abilities, as much as humanly possible.
My own bias is shading this opinion, though, of course, too. LOL.

The fact that you are asking about it shows you are not a number hitter! They never ask what you are asking, they just try to make the SC price come in, and the SC price drives the comp selection and adjustments. The only time these folks come in "low" are the extreme outlier SC . Different clients want different things from their appraisers and some don't want a number hitter. But quite a few do, only it;s covert now. Hopefully the better appraisers find the better clients...but this and always has been a not 100% as it should be business to an extent so better to know that going in.

I'd like to add that some appraisers have a number hitter mindset, whereas others have a MV mindset. Nothing wrong with coming in at SC price in a close call and in fact I'll say the small bias toward SC price is healthy in a purchase appraisal...as long as one can put it aside . The appraisers with a number hitter mindset do the same thing on a refinance or other purpose appraisal...come in high $ /wherever they think will make the client happy. I did a fair amount of review work at one time and some of the wort number hitting BS occurred on refinance appraisals, one cant claim the SC price influenced them.

 

[TRESinc]

I think the biggest issue I have is that knowing a SC price at all already puts a bias in our head, however slight. I'm more focused on the psychology of that. It's similar to me telling you NOT to think about a cow. The very fact that I've said cow makes you think about a cow, if only a bit. I guess the best that we can do is to "act in an impartial manner" to the best of our abilities, as much as humanly possible.

don't look at page 1 of the contract until you have completed your report. any information you would need from that page can be found elsewhere in the contract, outside of the price.