Bill would let appraisers 'round up' home values

[Mr Rex]

I thought Nevada was one of those strong Tea Party states? Aren't they all about the free market system? How does this line of thinking jive with that philosophy?

You thought wrong, didn't you notice that Harry Reid got re-elected?

 

[PropertyEconomics]

I ahve always thought a $96,000 appraisal should not halt a $100,000 purchase ... but in my mind that is not a rounding issue but rather an underwriting decision .... one more thing they want to hang around the appraisers neck .... truth just cant be truth any more.

 

[CANative]

Stigma shmigma

10 REO sales versus 1 so called market sale with numerous REO's still for sale tells me the market is primarily a REO driven market so I would be much more inclined to adjust the market sale downward rather than adjust the REO's upward for a stigma. Nice try Mentor.

As usual, you completely missed the point. You can't seem to think in more complex terms than sticking sales in a grid and filling out the form.

 

[SANDY]

As usual, you completely missed the point. You can't seem to think in more complex terms than sticking sales in a grid and filling out the form.

As usual you missed the point that Mentor trying to sell a bill of goods to appraisers to adjust REO's upward for market conditions (stigma) when in most markets the REO's represent current market conditions. There are many "sheep" on the forum who just might buy his line of crap.

 

[J Grant]

As usual you missed the point that Mentor trying to sell a bill of goods to appraisers to adjust REO's upward for market conditions (stigma) when in most markets the REO's represent current market conditions. There are many "sheep" on the forum who just might buy his line of crap.

Mentor is also a broker and active in brokerage work and from what I can tell retired from appraising, his view on this subject is more from the perspective of a broker...I fear niave appraisers buying into his theory will be stuck being liable for values far above prevailing market..nothing wrong with a high value when the market will support it, but in many areas, market conditions do not.

 

[J Grant]

I ahve always thought a $96,000 appraisal should not halt a $100,000 purchase ... but in my mind that is not a rounding issue but rather an underwriting decision .... one more thing they want to hang around the appraisers neck .... truth just cant be truth any more.

A 96k appraisal should stop a 100k purchase when the appraisal is correct. Chances are the appraiser already "stretched" the value to even get to 96k. More likely the appraisal should have been 92k. Honest appraised values give market particpants the choice of making informed decisions...the builder can lower the price, the buyer can put down more cash, or the buyer may choose to rexamine things and walk away. Rounding up to make values a few thousand to support sales contracts to make a deal work denies users of appraisal the opportunity to make informed decisions, an opportunity they may regret later. But so what, dumb buyer got stuck with an overpriced home, the lender is "happy" with the appraisal, the realtor is "happy", the builder is "happy"...

 

[JSmith43]

As usual you missed the point that Mentor trying to sell a bill of goods to appraisers to adjust REO's upward for market conditions (stigma) when in most markets the REO's represent current market conditions. There are many "sheep" on the forum who just might buy his line of crap.

I posted the applicable fanny & Freddie guidelines. Appraisers can draw their own conclusions. Why don't you and JGrant, the newly acclaimed cost approach guru, get a room?

JGrant, I maintained my brokers license since 1985. My retirement from appraising will certainly be breaking news for my clients. Nice research (not).

Bottom line, neither of you can successfully attack the line of reasoning (shared by many that will ultimately dissect your reports) and the support offered (the GSE guidelines). Do your job, do the proper research (if you know how, that is).

 

[Michigan CG]

A 96k appraisal should stop a 100k purchase when the appraisal is correct..............

Appraisals are never "correct" they are opinions.

Is the appraiser "correct" that the additional acreage is worth $4,000/acre or is it really $4,250/acre? How about that additional full bath, is it $6,000 or is it really $7,500? Is vinyl siding worth more than aluminum siding....is there a value difference? What about in five years when that aluminum starts to oxidize?

 

[SANDY]

The definition of Market Value, used in lending transactions (required by FIRREA) has several hypothetical conditions. REO don't meet some of them, in my opinion. REO sales can still be used as "proxies" for sales that more closely meet the hypothetical conditions in the market value definition.[/quote]

Yep that's your opinion or tail-I'm sittin on mine. Principle of substitution rules baby.

 

[J Grant]

Appraisals are never "correct" they are opinions.

Is the appraiser "correct" that the additional acreage is worth $4,000/acre or is it really $4,250/acre? How about that additional full bath, is it $6,000 or is it really $7,500? Is vinyl siding worth more than aluminum siding....is there a value difference? What about in five years when that aluminum starts to oxidize?

What is your point? To discredit your own profession? Do you want to say appraised opinions are worthless? When I used the word correct, the better word would have been credible and supportable . An appraised value may be "off" by $250 or differ 1000 in an adjustment from some cost figures or even what another appraiser would give value for. But overall, when developed properly, the opinion of value should be credible and supportable.

The issue from the thread is, once an appraiser has done their best to develop their opinion of value, should it be "rounded" up 4k to make a sales contract price? Or does the appraiser have the confidence to stand by their value, believing their value is more credible and supported than the sales contract price?

How does an appraiser gain the confidence to make that distinction? Some appraisers never get that confidence, because no matter what value opinion they derive, they almost always massage it or round it to meet the contract price, or a LTV % needed to make a refi work. Other appraisers will stand by their values.

Only time and the activities of the market can prove to an appraiser that their values have been credible and supported over the years and through diff market cycles. Yes, even propreties appraised the right way have fallen in value since the high market, but overall they have lost far less value than ones that were pushed to make sales prices or refi goals when the LTV % was off.