Can an Appraisal Committee of a Realtor Board be Successful?

[Austin]

Tom: All good points but it seems to me you are getting the cart before the horse. Until somebody points out the flagrant practices of what some Realtor/brokers are doing, nobody will know a problem exists. You have to be convicted by your sins and realize you have a problem before you can ax for help. It takes all kinds of people to get this done, agitators and reconcilers. I know some of you guys think I am a hatchet man but my objective is to point out problems and to dramatize them to wake some people somewhere up. That was my point in bashing Realtors/brokers. I was not exaggerating one bit. I see this stuff in the MLS every day. The Board has been told about it scores of times. You say Realtors/brokers have a different perspective; what perspective could there be in not knowing how to determine the most significant value-influencing factor GLA? How can you do a CMA when you don’t know if a finished Florida room is included in the reported GLA or not and you don’t even know what the correct GLA is? These are the people determining the prices and creating the data we analyze. How long does this have to go on before something is done about it? I can personally attest to about 30 years of the same abuses from some people that have been in this business for 30 years. There is a time for peace and reconciliation, but there is also a time and place for thrashing it out when a good thrashing is long over due. If you think I am rough on everybody else, you should hear what I say about myself sometimes. Some times I look over my old appraisals and think: Good Lord, how could I have been so stupid! Go back in your files for 5 years and read some of your old reports and you will probably say the same thing. That is why I spend so much time on this site-to learn new stuff so I won’t be as stupid as I was yesterday. I worked in a Realtor office for 17-years and was active in the Board with a father and brother that served numerous terms as president of the Board and on the grievance committee. The same crap was going on 40 years ago in the same firms I was referring to in my above post. I can remember back in 1963, hearing my father talk about one broker non Realtor that would not join the board because he didn't want to share data and play by the rules. This person has been dead for 25 years but his office is still running just like he ran it. Take it all and put nothing back. If anybody wants to know the GLA, let them go measure it.

 

[Tom Hildebrandt]

Austin

I do not disagree that many folks are less informed and knowledgeable than others. I do not disagree that we should be actively learning and improving our skills as professionals. I do not disagree that many rest on their laurels.

Heretical comment coming I do not agree that you need to measure every home and obtain GLA to come to a reasonable value opinion. The need to measure depends on a variety of issues, not the least of which is how well you know your market and the use for which you are putting the opinion. I can drive around a new subdivision where almost all of the homes are similar in age style and construction and know with resaonable certainity, given several sales in that market what the range in value is. I do not need to measure or inspect. I do agree that it is a good thing to know, and in most cases, it adds additional credibility to an analysis, but that is not the same as having to know.

In many ways, a broker who is active in a given market, and who has actually entered the majority of listings, expired sales, FSBOs and closed homes may be more knowledgeable regarding what contributes to value and what a reasonalbe market price may be than an appraiser even if they never measure a single home. We appraisers have no holy grail. We are just expected to be able to provide a rational basis for our opinion, the broker has no such obligation.

finally, I do not find you to be an extraordinary bad basher of brokers or Realtor basher, I know your protagonistic style, and I know that you occassionally get caught up in the rhetoric.

Regards

Tom Hildebrandt GAA

 

[Joe Birrell (NY)]

Tom:

I can only report what my experiences have been, apparently you are fortunate enough to find things different in NC. Can it work ? Maybe.
I thought it was a step in the right direction when I became involved, at the very least it couldn't hurt. I spent 12 years trying to make a difference at the local board. What I found was that the 12 or so officers of the board at least pretended they cared, however, the general membership (some 1800 people) were either unable or unwilling to make any changes in their behavior. It's not a matter of having a different mission or opinion, it's a matter of following standards of practice
and being professional. It's like a micro version of NAR. Their offical policies and positions are very noble, however, they are 180 degrees out when compared to the reality of what happens in the real world. Obtaining the highest price possible for the client doesn't give them a blank check to do whatever they want. The preamble of their ethics recites the "golden rule" , what can be more clear than that. Article 1-3 states thou shalt not mislead concerning the market value. Are there any honest, ethical, and professional Realtors ? Sure, but unfortunately not as many as there should be.

 

[Tom Hildebrandt]

Joe

You are right, ethics is a continuing educational battle.

Best regards

Tom Hildebrandt GAA

 

[Austin]

Tom:
With all due respect, you just pulled the rug out from under the entire appraisal process in that last post.

“I do not agree that you need to measure every home and obtain GLA to come to a reasonable value opinion. The need to measure depends on a variety of issues, not the least of which is how well you know your market and the use for which you are putting the opinion. I can drive around a new subdivision where almost all of the homes are similar in age style and construction and know with resaonable certainity, given several sales in that market what the range in value is. I do not need to measure or inspect.”

I assume you were wearing your appraiser's hat when you made that statement. If you can ride around a subdivision and determine an accurate market value, then why are we appraisers in business and why do we have USPAP? Can’t you see the total lack of logic in saying that? How can you have USPAP and all that it entails to measure and report on a market that, based on what you just said, is nothing more than how some body feels about what determines market value. There has to be a systematic approach to study, analyze, and report market patterns, and the unit of comparison just happens to be dollars per square foot and a price trend line, both of which are hinged on GLA. Basically what you are saying is that bigger does not necessarily cost more than less and value determining factors are totally abstract and arbitrary based on some mysterious force that we can’t explain. Is there a pattern to irrationality? If so we would have to resort to astrology and Tara Card reading because I know of no practices or methods with which to measure it? There I go again in a flight of rhetoric.
Can’t you see that you can’t have to competing systems, one practiced by Realtors who are creating the database with their irrational and unscientific practices based on gut feelings alone and the appraisal profession that has strict rules, procedures, and practices who are charged with determining a market value pattern by using scientific methods to make some sense of this madness. You just negated the units of measure on which the science of appraisal rest. Some people can add fractions that don't have the same common denominator, but I know an easier method. Assuming of course that the factions don't add up to 150% of the pie. I rest my case.

 

[Tom Hildebrandt]

Austin

You old dog. :lol:

We have been over this a least 100 times. The appraisal process starts with the definition of the problem. Who is the client? What is the value sought and use of the appraisal? These issues drive what are the appropriate property characteristics that must be identified and analysed.

All I am saying is that if the real property right I am appraising is the fee ownership in a typical home in a subdivision of very similar homes for which I have good data set of values, I can make a value conclusion, so long as it meets my clients needs. I do not need to do more analysis than that required by the defined problem.

The stock example is that of a request from a long term friend who is an attorney. He says I am getting ready to list a ranch built by ABC builders. It is the "monterey" ranch style, built to standard specs last year. What should I list it for? I ask, is the sole reason you want my opinion is to place the listing, not for any other purpose? He says yes. I ask, do you want a point value for market or do you want to know a probable range, he says probable range. I ask, do you want me to do a property inspection, he says no, you can if you need to but I can assure you the home is in good condition and was built to the standard "monterey" for that builder. I pull from my data base three one year old montery ranches in that subdivision, all built by the same builder that sold withing $5,000+/- of $100,000 within the past month. I call my attorney back and say, the probable range is $105,000 to $95,000, that I did not make a property inspection, that I assumed that the home is in good condition and that just like my comps, it was built to the standard specs.

You see, it does not matter to me what the size is, I have another, equally as good way of solving the problem by finding a diffferent unit of comparison. GLA is a great basis for comparison, and differences in GLA usually require adjustment, but it is not mandatory.

I do not need to know anything more about the property to provide him my opinion, I have met his needs and he is happy. The final thing I need to do to comply with standards is to open a work file, enclose the data and any notes, make a file memorandum identifying the client, the purpose, use, assumptions, date of the analysis and the oral report, and sign a certification.

If my client is a lender, I must meet that lenders guidelines, whatever they are. They probably include a measurement, but may not.

If the attorney had said I also need the value because my client is filing a lawsuit because she thinks the house was underbuilt and that she needs ot know the damages, and I agree to the assignment, I had better go and measure the house or take other reasonable steps (engineer or whatever) to allow me to properly define the relevant property characterisitics, ie, what the house should have been and what it actually is.

The scope of work has to fit the assignment. I do not need to make all assignments fit the same scope of work.

Another example. If I am asked to value the leased fee of this same house, on a five year lease. I do not need the square feet, unless I need that property characteristic to identify comparable leased fee properties. I confirm that the leased fee is all that is need for the use for which my client is going to put the report, I do not need to decide whether the lease is at market or not. If however, the use for which the client requires is an understanding whether the leased fee value is below, above or equal to the fee value, I have a bigger assignment. Again, I may or may not need the S./F to make those judgements. The relevant property characteristics are the issue. Well you get the drift I am sure. Heck, you have even argued this point before.

You may decide to treat the first problem differently, you may wish to utilize your statistical model, That is OK, there is more than one way to solve the problem adequately. I could chooose to use my statistical model, that is ok. Both our models have a line item for GLA. That is fine. We may or may not measure the house, we could use the tax or MLS records as representative of a "monterey" That would be fine, we used appropriate methods and techniques to achieve a credible answer for the client for the specific use. What is appropriate or adequate depends on the use and the subsequent

Heck you knew all this, you just wanted to check to see if I was awake.

Regards

Tom Hildebrandt GAA

 

[Tom Hildebrandt]

Austin

No, you missed my point I think.

Our process requires that you define the problem. Who is the client, what is the use of the appraisal and what is the definition of value. You then define the relevant property characteristics necessary to solve the problem for the client. You can then decide on the appropriate scope of work.

GLA and size are important, no question. There is a relationship and trend lines for quality, conditon size etc.

But GLA is not the only unit of comparison that must be used in selecting comps. For many residences, it is the best unit, particularly when the comparables are not similar property types or style, but it is not the only possible unitof comparison.

But if you have three comps of a similar location, style type, age and condition, one does not really care about GLA if all you really care about is the value. Three good sales of the same type condo in the same development maybe all you need to give a value for the purpose of listing a condo. Measuring the subject would not be required for a broker listing the property.

But it would be required if your lender wanted it, or if you need to make adjustments.

As in much of appraising, the correct answer for what is the correct unit of comparison is "it depends".

Regarding the rest of your discussion, what is right or wrong is a matter of perception. My posiiton is brokers and appraisers have differnet perspectives created by differnet objectives, ie, the problem is defined differently.

Regards

Tom Hildebrandt GAA

 

[Tom Hildebrandt]

Austin et al

Did not mean to post twice. Thought I lost the first one in to the "ether", this is the part of real proeprty rights that is unknown, (subsurface, surface air are well known) .

Tom Hildebrandt GAA

 

[Austin]

Tom:
You are by nature a peacemaker and I think you are trying to create a mosaic with the rules in a vain attempt to justify the errant proclivities of many Realtors as expounded above. If I didn’t know better I would think you were jockeying for appoint to some state commission. Your example of all comparables being clones in all aspects seems to me a real stretch to make your point. Any way, whatever you are running for, you have my vote. I think we need more leaders that can stand on both sides of an issue. As the old politician use to say when a controversial issue came up: “I have friends for that issue and I have friends opposed to that issue. On that issue I will stand behind my friends 1000%."
I worked in the office with an agent once that ran for the county board of supervisors. His family had lived in his district for 75 years and his father was a prominient business man. I was talking with him one day and he was fence straddling on every issue. Finally I said: "John if you lose this election with your position on the issues given your promience in your district, if I were you I would put a sign on the back of my pickup truck and tell every voter in the district to kiss my grits." He said: "Oh no Austin, I would never do that. I can accept the decision of the voters." When the votes were counted his opponent received over 9000 votes and old John got about 450. When I got to the office the next morning there was a note on my desk: "Austin. John called and said to get the sign ready!" The moral of the story is: You can't be everything to everybody because if you try you end up being nothing to anybody. Except your 450 relatives of course.

 

[Tom Hildebrandt]

Austin

What that a compliment or a flame? I still like your style.

I honestly believe what I am saying. The correct application of the process and use of rudimentary tools is by far better than inaccurate application of the process and over application of the most sophisticated tools.

Regards

Tom Hildebrandt GAA