Being Told The Contract Price Of A Subject

[J Grant]

I don't have the time, energy, or inclination to explain reasons why you would want to analyze a contract price. This is SOP. Getting it right means that you analyze the information that you have. Additional data points, including contract prices can do nothing to hurt your MVO, but a contract price aberration could indicate other issues associated with the property.
Is Mr. Hatch in the building? Maybe Michigan CG or GoBears?

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.

 

[Carnivore]

If I know I'm going to come in lower than a contract price my primary interest will be in slamming the door so hard on their hopes and dreams that it cuts their toes off. I don't want to give them the opportunity to even ask the question before doing my level best to burn that unreasonable contract price alive at the stake.

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There it is in a nutshell. That is the only answer to avoid the harassment that will surely come if you don't! So you can do it upfront, or like many you can do it later. That's the gamble they take. Unfortunately it is flawed Logic. The correct logic is do it on your terms(time schedule) or employ flawed logic and wait for them send the clarification/explanation request and you do it on their terms. To bet they will miss it or mind read you is a bad bet. The Table always is a winner!

 

[Phil McDonald]

It wasn't until post 40 that it was pointed out the USPAP requires an analysis of the current agreement of sale. The post also began with a focus on bracketing, which is a big focus on a minor thing. Nothing actually needs to be bracketed in an appraisal. It is a good practice if it can be done and certainly should not be a foundational consideration when completing an appraisal. I get that in residential it is a big underwriting thing and my point is that the focus should be first on the appraisal and underwriting issues are a distant secondary thing.

In regards to the sales contract being provided and the USPAP requirement, I don't have a problem with this. I want all the information about anything and everything when completing an assignment.

The idea that appraisers need to be put in a bubble and protected from any sort of pressure is a bit offensive. Everybody has an agenda, there are always attempts at undue influence. I don't need protection from that in order to not be influenced. I am not influenced because it is my job to not be influenced. When someone reveals to me thier agenda it allows me to listen to what they say through that filter. Nobody in this world is every going to take me by the hand and lead me anywhere as if I were a small child. When appraisers complain about things like pressure or needing to be protected from seeing something or knowing something it sounds like small children who can be so easily influenced that they need protection.

As far as public perception being constructed based on the fact that we are made aware of the terms regarding the current agreement of sale. I wonder how the current and past culture of appraisers screaming for protection, being asked to be placed in a bubble etc.. has an impact on that public perception. I think it makes appraisers look weak, easily influenced etc..

I know my thoughts on this are very unpopular on this forum.
I just think that a better approach would be to just be strong enough to never be influenced. Do the work, provide the answer and if anybody disagrees with the answer put it on them to prove you wrong.

 

[J Grant]

Phil, in theory I agree with you, but reality and the consequences and past history speaks louder than theory....let me ask you a question, how much of your work is lender residential work?

Certain professions where there can be a clear conflict of interest between protecting public trust and the professional obligations/ business side indeed are provided with "protection" or more correctly their hired status ensures it-

FDA meat and food inspectors work for the FDA , they are not hired by the food companies

 

[Deleted member 152047]

I want all the information about anything and everything when completing an assignment.

The idea that appraisers need to be put in a bubble and protected from any sort of pressure is a bit offensive. Everybody has an agenda, there are always attempts at undue influence. I don't need protection from that in order to not be influenced. I am not influenced because it is my job to not be influenced. When someone reveals to me thier agenda it allows me to listen to what they say through that filter. Nobody in this world is every going to take me by the hand and lead me anywhere as if I were a small child. When appraisers complain about things like pressure or needing to be protected from seeing something or knowing something it sounds like small children who can be so easily influenced that they need protection.

As far as public perception being constructed based on the fact that we are made aware of the terms regarding the current agreement of sale. I wonder how the current and past culture of appraisers screaming for protection, being asked to be placed in a bubble etc.. has an impact on that public perception. I think it makes appraisers look weak, easily influenced etc..

I know my thoughts on this are very unpopular on this forum.
I just think that a better approach would be to just be strong enough to never be influenced. Do the work, provide the answer and if anybody disagrees with the answer put it on them to prove you wrong.

Not at all.....well said!!

Why wouldn't an appraiser want to know the contract price? Are you scared of your own shadow?

 

[J Grant]

Not at all.....well said!!

Why wouldn't an appraiser want to know the contract price? Are you scared of your own shadow?

I'll ask you the same question, what percent of your own work is res lending mortgage work?

How can appraisers be so obtuse as to what the problems are....the problem is not that appraisers are scared about knowing the contract price, or being influenced . The problem is the way the business punishes honest appraisers , and rewards "number hitters", or value infiltrators, since the same problem is present with refinances where a high LTV % is the lender goal and makes the borrower "happy". Are you truly unaware that is the reality?

The problem appraisers have is on the business side....if an appraiser comes in below a SC price on more than rare occasion, or "low " on a refinance on more than rare occasion, the lender ( or AMC now) just stops assigning work and turns to another appraiser. That was the problem pre housing crash and due to a compromised firewall now, still the problem. There are a smaller set of lenders who will not do this, but the majority do and I would assume it applies to their staff appraisers as well

 

[Deleted member 152047]

I'll ask you the same question, what percent of your own work is res lending mortgage work?

How can appraisers be so obtuse as to what the problems are....the problem is not that appraisers are scared about knowing the contract price, or being influenced . The problem is the way the business punishes honest appraisers , and rewards "number hitters", or value infiltrators, since the same problem is present with refinances where a high LTV % is the lender goal and makes the borrower "happy". Are you truly unaware that is the reality?

The problem appraisers have is on the business side....if an appraiser comes in below a SC price on more than rare occasion, or "low " on a refinance on more than rare occasion, the lender ( or AMC now) just stops assigning work and turns to another appraiser. That was the problem pre housing crash and due to a compromised firewall now, still the problem. There are a smaller set of lenders who will not do this, but the majority do and I would assume it applies to their staff appraisers as well

0%

 

[J Grant]

Zero percent, which at least explains expounding with false assumptions about the topic .Waiting for Phil to answer.

Your responses do indicate direct experience with the consequences- I explained it should you have an interest in it- the housing market collapse and subsequent HVCC separating loan officers from ordering appraisals and failed firewall solution of the AMC's shows how serious the problem is.

I doubt appraisers are any worse as a group than any other group of people about withstanding pressure...though imo the lack of higher education entry requirement did not help as far as filtering and that goes double for the so called supervisors who went on to train . Overall the fact is that appraisers are put in an impossible position around res lending mortgage work, and those with little or no direct experience with it simply can not fathom it. I think to cope, some appraisers compromise and then find ways to rationalize it.

Food inspectors are hired by the FDA , not by the food industry and the same goes for other professions who are supposed to serve the public interest in their work. Res mortgage lending is a special subset of appraisals and needs its own set of engagement which it got with the HVCC and DF, only no real separation of business and practice since AM's get their continued business survival from lender alignment.

 

[Mike Kennedy]

An agreed upon Contract Price is ONLY an offer to purchase - the vast majority of residential sales contracts contain a Contingency Clause.. i.e. the price is an offer only - it is NOT a real sale price until the deal closes and it becomes reality.

Financing Contingency - Offer or Deal Subject to Financing Approval

https://corporatefinanceinstitute.com › Resources › Knowledge › Deals & Transactions
"In a home sale and purchase agreement, financing contingency refers to a clause that expresses that the offer is contingent on the buyer securing financing for the property. A financing contingency provides the buyer with protection from potential legal ramifications in case the deal fails to close."

A contract price reflects only the hopes, dreams, aspirations, goals, wants, needs, and desires of the parties to a signed contract. The competitive market may or may not support the agreed upon purchase price. Determine the competitive market's reaction to a subject property IS the purpose of an INDEPENDENT, AND OBJECTIVE Appraisal.

"Competitive market" = confirmed closed and VERIFIED sales of OTHER properties reflecting the actions of "TYPICAL" local buyers who bought the most competitive local, similar OTHER properties which would serve as "Substitutes" (Principle of Substitution).

Solve the dilemma:

Bank "we need a Market Value appraisal for mortgage financing purposes".

Independent Appraiser "no problem TAT is, and Fee is $$.

PERIOD.

 

[Deleted member 152047]

Zero percent, which at least explains expounding with false assumptions about the topic ..

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