Bracketing, Part Deaux

[Dale Smalley]

So if the comps are all the same size and sold for the same price. That is not bracketing. Would you choose less comparable sales for the purpose of bracketing?

 

[Frederick R. Ruffell]

So if the comps are all the same size and sold for the same price. That is not bracketing. Would you choose less comparable sales for the purpose of bracketing?

Not sure if this was directed at me or not, but the question seems to lack common sense.

Of course if you have perfect model matches (as often happens in large condo.projects) then those are the best comparables and should be used. Bracketing is just a common valid tecnique used by many appraisers (also necessary for paired sales analysis). We all know that when using multiple regression analysis greater than 90% of price differential is explained by differences in GLA, the rest of the amenities are where you should bracket IF you cannot find identical amenities. If you cant then there are other tecniques to determine an appropriate adjustment if any.

 

[Dale Smalley]

No direction at you Fredrick I like bracketing as much as the next guy but making it a requirement is anoying when dealing with small differences in GLA. I know they like to see bracketing on the top as well as the bottom and even palcement on the map as well. I guess they want it that way to stop the use of all superior comps.

 

[Fred]

If you dont select the "best" comparables to measure the value of the subject I would say you are in violation of USPAP. Simple as that.

agreed...

It would be that simple if you didn’t actually have to support the opinion by quoting the “best” comps rule from the real USPAP. Where is that one, by the way?

Anyone heard of scope of work?

 

[Mike Garrett RAA]

Several interesting things here...

1. We should remember not all appraisals fall under Fannie Mae guidelines.

2. Appraisers often fail to read the certifications they sign. May I call your attention to Certification 7..."I have selected and used comparable sales that are locationally, PHYSICALLY (my bold), and functionally the most similar to the subject property".

That would suggest to me that using exact model matches would be the most preferable.

3. It's your appraisal not the underwriter's. You should be the judge of what is the "best" comparables and you should convy that to the underwriter in no uncertain terms. Why? Because they are rarely appraisers and don't know why we do certain things.

4. Ideally the comparables we select should represent a variety of features or amenities so that some would be superior and some inferior...because that is the market.

5. I believe underwriters should be licensed. Part of that licensing should include formal appraisal education which would include a USPAP course.

 

[Meandering]

Bracketing comparables as expressed by HUD

Comparable Selection
At a minimum, comparable selection should be based on properties having the same or similar locational characteristics as well as physical characteristics which includes: style, age, size, utility and condition.
Comparable sales should never be selected based on sales price.

In selecting comparables, use the bracketing method. Bracketing, as defined in The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute, is “a process in which the an appraiser determines a probable range of values for a property by applying qualitative techniques of comparative analysis to a group of comparable sales. The array of comparable sales may be divided into two groups – those superior to the subject and those inferior to the subject. The adjusted sales prices reflected by these two groups limit the probable range of value for the subject and identify a bracket in which the final value opinion will fall.” It is advisable to bracket sales using both dwelling size and sales price whenever possible. If bracketing is not possible, the appraiser should explain why.

http://www.HUD.gov/offices/adm/hudclips/handbooks/hsgh/4150.2/41502appdHSGH.doc

I don't make the rules I just keep explaining why they don't work.

 

[Mike Garrett RAA]

First of all those are guidelines...not rules!

 

[Meandering]

Either way, I don't make rules or guidelines.