Closed Sale After My Inspection Date

[Michigan CG]

15-20 people are telling ONE person involved in this thread that she is wrong and the thread continues.

 

[timd354]

I understand it, I don't accept that it is not misleading. .

How on earth can it be misleading if the appraisal report fully discloses everything about the comparable transaction, including the closing date, whether or not it is listed in the SC grid as a pending or closed sale?

I just love how some appraisers automatically label anything else other than the way they would do it as being misleading, a USPAP violation, poor appraisal practice, etc., etc.

 

[J Grant]

Mich CG-15-20 people are telling ONE person involved in this thread that she is wrong and the thread continues.

Note that Mr Rex and Peter Lequire BCJR, Pushin Valu, Mike Kennedy ( see their posts) share my view so it is not just ONE person....

I just re read and counted, 8 posters use closed after eff date , 6 posters (including me) keep pending as of effective date....(the remainder of posters made neutral comments or asked questions). So it is 8, not 15 or 20 ...( some of the 7 kept posting over and over but so did I)

Older threads on this topic ( google it) show more people supported pending the as of effective date..among them Property Economics who no longer posts here. That is the thing with peer practice...over time, in a gray area, appraisers see other appraisers do it so they figure okay I'll do it. Maybe that is a positive evolution, maybe a negative one. Obviously, opinions differ on it

 

[J Grant]

How on earth can it be misleading if the appraisal report fully discloses everything about the comparable transaction, including the closing date, whether or not it is listed in the SC grid as a pending or closed sale? I just love how some appraisers automatically label anything else other than the way they would do it as being misleading, a USPAP violation, poor appraisal practice, etc., etc.

I took $20 from your wallet, but after I took it I disclosed it. Okay, does the disclosure make it right? It is not misleading in that I disclosed what I did, but misleading because I took $ without your knowing I did and disclosed AFTER.

I will buy the viewpoint of rationalization put forth here that if they disclose, it was not misleading. I get it. Appraisal is made up for better or worse of peer practice. Back in the boom , a good many peers were doing comp checks. If a number of people do something, does that make it good practice... everyone has to answer for themselves..

As you are an attorney, let me ask you this, what do you think the language of the statement on the URAR about as of effective date mean it to be? ( private work where appraiser uses different statements may differ). But on the URAR, the as of effective date is the same as the signature date and same as the date of valuation. What do you think that is supposed to mean, or is it just there for decoration?

The definition of market value implicit is passing of title and consummation of subject sale as of a specified date ( the specified date links MV definition to opinion of value as of the effective date)
Meaning the subject in our appraisal consummated sale at our MV opinion of most probable price as of the effective date. Therefore, if a comp closed AFTER the effective date, how could that change the price of subject closed 2 days prior What does your legal training tell you about that?

 

[J Grant]

http://www.freddiemac.com/learn/pdfs/uw/apr_reminders.pdf

It says here under sales comparison approach at least 3 sales that closed 12 months before the effective date. For other sales, I assume they mean older than 12 months, not sales that closed after the effective date.

TMD, when HUD/FHA references closed sales, or Fannie, do you think they mean closed as of effective date, or closed as of report date? Prior sale of subject within 3 years of effective date is specified.

When on report the effective date is same as inspection and same as valuation, is the effective date only applying to the subject, and then any date up to signature for the comps?

 

[Mike Kennedy]

http://www.freddiemac.com/learn/pdfs/uw/apr_reminders.pdf

It says here under sales comparison approach at least 3 sales that closed 12 months before the effective date. For other sales, I assume they mean older than 12 months, not sales that closed after the effective date.

TMD, when HUD/FHA references closed sales, or Fannie, do you think they mean closed as of effective date, or closed as of report date? Prior sale of subject within 3 years of effective date is specified.

When on report the effective date is same as inspection and same as valuation, is the effective date only applying to the subject, and then any date up to signature for the comps?

It also says:

 All comparable sales verified as recorded (data source MLS, sales office, SREA, CMDC, real estate agent, etc.).

 The appraiser provided an analysis of the sales and transfer history of the subject property and comparable
sales.

 

[The Warrior Monk]

I took $20 from your wallet, but after I took it I disclosed it. Okay, does the disclosure make it right? It is not misleading in that I disclosed what I did, but misleading because I took $ without your knowing I did and disclosed AFTER.

Wrong analogy.

The proper analogy would be to write up a contract between the parties prior to money being taken, the take the money on the specified date as contractually agreed upon. The disclosure exists all along, and the parties know that the money will be taken prior to the money to be taken.

I followed this thread for a few pages before jumping out a window. If the property is under contract to be purchased as of the date of value, the contract price is a discoverable fact as of the date of value, and it relevant to the valuation.

 

[J Grant]

Wrong analogy.
The proper analogy would be to write up a contract between the parties prior to money being taken, the take the money on the specified date as contractually agreed upon. The disclosure exists all along, and the parties know that the money will be taken prior to the money to be taken.
I followed this thread for a few pages before jumping out a window. If the property is under contract to be purchased as of the date of value, the contract price is a discoverable fact as of the date of value, and it relevant to the valuation.

The contract price is often not discoverable of the pending sale as of the date of value ( effective date), almost no agent or seller would disclose what is confidential information at that time. But even if a party discloses contract price, it still does not change the fact that the comp was pending as of that effective date. Learning a contract price did not mean the comp closed on that date, correct?

OF course the pending comp is relevant to the valuation, so use it as a pending sale. If appraiser discovers the contract price as of eff date, analyze it. If appraiser learns the pending comp closed after effective date, information to support a trend.

Your analogy is off because it is not relevant to situation, though my analogy may have been harsh / The analogy is what is misleading; does a disclosure means a gray area of practice is clearly understood by a client or not...do they rely on the explanation about technicalities of dates that (imo) the reader doesn't' truly comprehend , or do they rely on what they see on the grid ( closed/pending) and in their mind link it to the effective value date.

Does the act of making a disclosure mean something is not misleading...even if a reader can be misled by the disclosure itself? because while the disclosure lays out the time line of dates, imo most readers still won't get it and believe what they see on the grid as a comp status about closing means as of effective date, since the effective/inspection date is stated as the valuation date. Perhaps a lawyer could decide. Some readers don't bother with narrative and a computer scan reads the grid.

 

[Mr Rex]

One of the tenets of USPAP is what your peers do. JGrant you have a bunch of peers that are telling you what they think is acceptable. It will not persuade me to change the way I do things but at some point Don Quixote gave up tilting at windmills.

 

[The Warrior Monk]

The contract price is often not discoverable of the pending sale as of the date of value ( effective date), almost no agent or seller would disclose what is confidential information at that time.

The rent and lease terms on commercial/industrial properties isn't often discoverable, or readily available to the public, either. Does that mean the income approach is not relevant and can't be used?

But even if a party discloses contract price, it still does not change the fact that the comp was pending as of that effective date. Learning a contract price did not mean the comp closed on that date, correct?

Should appraisers also toss out all listing data because it is not closed as of the date of value? Listing can't help set the upper limit of value because they're not closed?

All data should be used in its proper context.

Your analogy is off because it is not relevant to situation, though my analogy may have been harsh / The analogy is what is misleading; does a disclosure means a gray area of practice is clearly understood by a client or not...do they rely on the explanation about technicalities of dates that (imo) the reader doesn't' truly comprehend , or do they rely on what they see on the grid ( closed/pending) and in their mind link it to the effective value date.

Readers of appraisal reports for lending assignments typically are sophisticated readers. They should no how to read an appraisal report. The only issues that arise will be due to the appraiser not be clear on a particular matter, or the reader not being sophisticated.

Does the act of making a disclosure mean something is not misleading.

Yes, if done properly. Obviously some matters require disclosure be more prominent than others; e.g., USPAP requirements pertaining to hypothetical conditions and extraordinary assumptions.

.even if a reader is misled by the disclosure because though the disclosure states facts about dates, the reader, not being a trained appraiser, does not grasp the implications....maybe a lawyer could decide!

The appraiser should perform their duties as an appraiser as prescribed by USPAP, state license law, etc. The appraiser cannot be responsible for a lender or AMC having an ill-trained or untrained individual reviewing the report.