Closed Sale After My Inspection Date

[Tom4value]

My loyalty is to USPAP, not EUD. I am to provide the most reliable comps possible. Therefore, I would most definitely use this as a comp and explain that it closed 2 days after the effective date of the appraisal. Therefore, it is not fraud. I would then toss in another comp that closed on or before the effective date. Everybody happy, happy, happy!

 

[Ariba]

Inspected a property 06/19 used a closed sale of 06/21. I stated the sale as closed and not pending as it was on inspection date...how would you report the comparable and why?

Thank you for the feedback!

You left out one important fact, what is the impact of this one particular comparable to your opinion of value? My guess is that it will increase your opinion of value.

 

[Michigan CG]

My loyalty is to USPAP, not EUD. I am to provide the most reliable comps possible. Therefore, I would most definitely use this as a comp and explain that it closed 2 days after the effective date of the appraisal

Common sense is not allowed according to some.

 

[J Grant]

My loyalty is to USPAP, not EUD. I am to provide the most reliable comps possible. Therefore, I would most definitely use this as a comp and explain that it closed 2 days after the effective date of the appraisal. Therefore, it is not fraud. I would then toss in another comp that closed on or before the effective date. Everybody happy, happy, happy!

Your loyalty is to USPAP....yet USPAP says not to be misleading. USPAP says to fulfill assignment requirements. The assignment is for an as of effective date opinion of market value.. If you are using sales that closed after the effective date, even with disclosure, it might be construed as misleading. I don't see how this is being "loyal" to USPAP.

The below is from an Appraisal Foundation guideline to lenders

"As the client, I contacted the appraiser to ask him to change the effective date of his appraisal to make it one week after the effective date shown in the report. Does USPAP permit the appraiser to simply change the effective date without taking additional steps? No. As indicated in the USPAP Scope of Work Rule, the effective date of the appraiser’s opinions and conclusions is an assignment element. If the client asks for an appraisal with a different effective date, the appraiser needs to determine the appropriate scope of work to produce credible assignment results for this request. Such a request would need to be considered a new assignment, but that does not necessarily require “starting from scratch.” As with all new assignments, the appraiser must decide the appropriate scope of work to produce credible assignment results. This would include a decision as to whether or not it was necessary to perform another inspection, as well as the extent of any additional research and analyses that might be required. The scope of work for the new assignment may be different from the scope of work completed in the earlier assignment. As with any assignment, the appraiser might be able to use information and analyses developed for a previous assignment."

 

[J Grant]

Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting conditions, and appraiser’s certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is $ , as of , which is the date of inspection and the effective date of this appraisal.

DEFINITION OF MARKET VALUE: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions* granted by anyone associated with the sale.

Above is what we sign. The specified date is the effective date.

It's not a matter of which is the best comp, or common sense. The assignment condition is for a market value opinion of value AS OF the effective date, not after it. After the effective date is for analaysis, but analysis is not the same as changing the data that was present as of effective date.

The definition of market value: implicit as of effective date consummation of sale of the subject with passing of title.

Since our most probable price $ amount is a consummated sale of subject as of an effective date, how could its most probable price change because a sale closed after the effective date?

IF I sell and close my house as of June 19 and title passes to buyer, can I demand buyer return to the closing table and pay me more money because another house sold for more on June 21 ? No. .Can seller demand I return to the closing table and we change price and legal title because another house sold for less on June 21? No

 

[J Grant]

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

Page 3 , line 5 ( under sales comparison approach)

 

[J Grant]

131. DATE OF APPRAISAL
Question: What is the date of appraisal?
Response: The date of the appraisal is an ambiguous term. The appropriate terminology is either the effective
date of the appraisal, to reflect the time period relevant to the assignment results, or the date of the
report, which indicates when the appraisal analysis was completed.

132. DATE OF VALUE
Question: Is the effective date of the appraisal the same as the date of value?
Response: Yes.

pasted Mr. Rex's post # 66. It states the time period relevant to assignment is as of the effective date, with the period after effective for analysis ( and report writing).

Analysis is not the same as changing the status of data retroactive to the effective date .

Example: two appraisals are ordered on same property, (typical of high end properties or flip sale FHA assignments.)

Both appraisers inspect the subject property June 5, 2017. June 5, 2017 is the as of effective date of both reports. One appraiser finishes report and submits it June 8, 2017, second appraiser finished and submits report June 15, 2017, Second appraiser uses as closed, a sale that was pending June 5 ( it closed June 12). The first appraiser used it as a pending sale. The second appraiser concluded a value differently using this comp as closed than he would have as a pending. Which appraiser fulfilled the date of value as of the effective date assignment condition ?

 

[J Grant]

https://www.fanniemae.com/content/guide/selling/b4/1.3/07.html

In Overview they refer to as of effective date

 

[J Grant]

Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting conditions, and appraiser’s certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is $ , as of , (X) which is the date of inspection and the effective date of this appraisal

The above is what exists.

If they wanted appraisers to keep including new data and data changes that occurred after the effective date up to signature date it would be expressed like the below :

Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting conditions, and appraiser’s certification, the date of (X) is the date of inspection and my (our) opinion of the market value, as defined, is (Y) which is the effective date and the signature date of report.

 

[bnmappraisal]

You left out one important fact, what is the impact of this one particular comparable to your opinion of value? My guess is that it will increase your opinion of value.

And would that be a bad thing? Either way, increase or decrease in OMV, the pending/sale obviously has an affect! Why would an appraiser ignore a pending as of eff date it it has an affect (again, positive OR negative!) on their opinion of market value?!