Bracketing the contract price

[sputnam]

If that were the case then you wouldn't be reading this thread because it wouldn't exist!

No... the thread exists because some forum member hasn't been told.. or has forgotten... about supplemental guidelines that the Client can require as long as you don't have to violate USPAP or other regulations/laws. Then there is the simple matter of doing what you agreed to do. If you accept an assignment, you agree to comply with the Client's requirements (subject to the previously mentioned caveat). If you are accepting assignments without first thoroughly reading the request and doing at least some preliminary research on the subject then, you will be spending some of your time taking care of revisions requests.

 

[Mike Ault]

No... the thread exists because some forum member hasn't been told.. or has forgotten... about supplemental guidelines that the Client can require as long as you don't have to violate USPAP or other regulations/laws. Then there is the simple matter of doing what you agreed to do. If you accept an assignment, you agree to comply with the Client's requirements (subject to the previously mentioned caveat). If you are accepting assignments without first thoroughly reading the request and doing at least some preliminary research on the subject then, you will be spending some of your time taking care of revisions requests.

I'm pretty sure that this thread exists because the OP received criticism from some underwriter demanding a bracketing "comparable" and that performance expectation was not clearly communicated in the Letter of Engagement. Bracketing is great when you have "comparables", it is misleading when you simply recite "sales" to meet some investor overlay. Appraisers of the opinion that the underwriter is some sort of God that must be obeyed is a mistaken point of view that was hopefully put to rest during the course of this thread.

 

[Jayjay25]

I have a few more questions about this one. What was the list price, was it reduced and how long was it on the market? If a home was originally listed for $300k, reduced to $280 a few months later and appraised at $320 and the differences weren’t addressed in the report I would have additional questions as well.

 

[TerryRohrer]

I'm pretty sure that this thread exists because the OP received criticism from some underwriter demanding a bracketing "comparable" and that performance expectation was not clearly communicated in the Letter of Engagement. Bracketing is great when you have "comparables", it is misleading when you simply recite "sales" to meet some investor overlay. Appraisers thinking that the underwriter is some sort of God that must be obeyed is a mistaken point of view that was hopefully put to rest during the course of this thread.

Of course, they often say, "put it in the report and don't give it any weight." My reading of that phrase is, "please mislead us so we can make this loan and collect our fees. Oh, and make sure to keep your E&O in force for when we need it because you misled us." I'm sure when they contact your E&O down the road, they will then be saying, "we never would have made this loan if that SOB appraiser hadn't misled us!"

 

[TerryRohrer]

I have a few more questions about this one. What was the list price, was it reduced and how long was it on the market? If a home was originally listed for $300k, reduced to $280 a few months later and appraised at $320 and the differences weren’t addressed in the report I would have additional questions as well.

All those details would normally be reported in the listing history section. My take is that the opinion of value was, say, $150,000, the adjusted and unadjusted sale prices ranged from, say, $125,000 to $175,000, and the contract price was, say, $100,000. Now, the underwriter wants the contract price bracketed by something. In this case, my report was simply indicate that analysis of market data does not support the contract price as representative of the subject's current market value. If the deal was something like parents to son or similar, I would note that as well, but I would not waste any time trying to explain the difference between the contract price and my opinion of value. I have never seen any requirements to do so, save for in a few AMC engagement letters. Those I generally decline.

 

[sputnam]

All those details would normally be reported in the listing history section. My take is that the opinion of value was, say, $150,000, the adjusted and unadjusted sale prices ranged from, say, $125,000 to $175,000, and the contract price was, say, $100,000. Now, the underwriter wants the contract price bracketed by something. In this case, my report was simply indicate that analysis of market data does not support the contract price as representative of the subject's current market value. If the deal was something like parents to son or similar, I would note that as well, but I would not waste any time trying to explain the difference between the contract price and my opinion of value. I have never seen any requirements to do so, save for in a few AMC engagement letters. Those I generally decline.

I might tell the underwriter to jump in a lake. As the appraiser, I am not privy to the negotiations and motivations of the Buyer and Seller. If the U/W wants me to bracket the contract price, they can either show me the guideline that requires that... or.... they can pay my fee for making them happy.

 

[Jayjay25]

Playing devils advocate here. If the appraised value is significantly higher than the contract price and also higher than a reduced list price then that would initiate the type of revision requested, especially if the report has a weak/canned final reconciliation. A more appropriate revision request for that situation would be to provided additional commentary explaining the difference between the contract price, list price and the final estimate of value. Defiantly not appropriate to ask for additional comps to bracket the contact price - that’s just sounds like the AMC hired a former Taco Bell employee to review their appraisals.