Closed Sale After My Inspection Date

[Ariba]

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?!

Because IMHO, if this was a sale and your opinion of value for the property was at the contract price and/or above you would not have posed the question in the first place.

 

[bnmappraisal]

Because IMHO, if this was a sale and your opinion of value for the property was at the contract price and/or above you would not have posed the question in the first place.

Posed what question?

I still stand by that post you quote. If a pending (as of eff date) is a good comp and is truly comparable to the subject, and closes within 2 days of the eff date, I'd use it! It may have a lower close price than my OMV, maybe the same, maybe higher. There are a bunch of reasons why it may be a great comp! Again, I generally would use it as a pending as of eff date and comment about it closing 2 days later, but I could see appraisers including it as a closed and commenting/disclosing that it was pending as of eff date and using it as comp 4, 5, 6, etc for additional support.

I just finished up a report Friday that had a garage bath. Although these are pretty common in my market, finding them in the MLS takes some work. Thankfully I had enough data/comps to complete it, but to use this thread as an example: If I had a pending as of my eff date and it closed 2 days later, and this comp (pending or closed) had a bath to add support for my subject's garage bath, I sure as hell would use it! Just because an appraiser uses a comp doesn't mean that comp "makes or breaks" their OMV.

There are tons of reasons why the OP may have wanted to use this pending/sale as a comp. I don't believe the OP stated the actual reason (I'll check here after posting)

(Edit to add: Yup, OP never said reason for using said comp. He was just asking how others deal with the pending/closed situation)

 

[Mike Kennedy]

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

I finally found one "official" reference...read down to the Sales Comparison Approach, line 5: they state at least three comparable sales must have closed before the effective date.

Would follow if a sale closed after effective date before signature date on the grid as a closed comp, would have to be a fourth comp...if one chooses to do that.

Whether Fannie has same guidelines might take time to find out but the entities tend to have similar guidelines .

 

[Mike Kennedy]

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

from the freddie pdf above - also see Bullet 3

I finally found one "official" reference...read down to the Sales Comparison Approach, line 5: they state at least three comparable sales must have closed before the effective date.

Would follow if a sale closed after effective date before signature date on the grid as a closed comp, would have to be a fourth comp...if one chooses to do that.

Whether Fannie has same guidelines might take time to find out but the entities tend to have similar guidelines .

FANNIE PDF - section 2, para 1, sentence 4. << self-explanatory.
https://www.fanniemae.com/content/guide/selling/b4/1.3/08.html

 

[Tom4value]

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."

So how is it misleading? It closed 2 days after the effective date but the meeting of the minds was well before the effective date. Indeed, NOT using it as a comp would be ignoring reliable data and THAT WOULD BE MISLEADING.

 

[Michigan CG]

So how is it misleading? It closed 2 days after the effective date but the meeting of the minds was well before the effective date. Indeed, NOT using it as a comp would be ignoring reliable data and THAT WOULD BE MISLEADING.

Common sense is not always the rule for some folks.

 

[J Grant]

So how is it misleading? It closed 2 days after the effective date but the meeting of the minds was well before the effective date. Indeed, NOT using it as a comp would be ignoring reliable data and THAT WOULD BE MISLEADING.

It's misleading because AS OF the effective date means before and up to and including, the effective date. How do you believe "as of" also means " after"??

As far as it would be misleading to ignore reliable data? It was RELIABLE DATA as a pending sale, AS OF the effective date. THAT is how it should be used, (which is not ignoring it) Using it as the status it was as of effective date ( pending ) and then commenting it closed 2 days later at X $ price is the reliable way to use the data.

As defined means as defined in the market value definition. I posted it here in this thread, but will remind that the market value definition states an implicit consummation of sale and passing of title as of the effective date. Old threads on this topic show up if you type the subject in google, which shows similar divide on this topic. Property Economics argued that as of the effective date meant it was pending as of the effective date on those old threads that show up on google... I miss his commentary wish he was still on the board.

 

[residentialguy]

You're the appraiser. You give it as much weight as you are shown that it has. You don't need to call it a closed sale to do that.

But on the other hand (as far as the effective date), I've taken more than one day to inspect...and the conclusion of my inspections became my effective date. The day of the physical inspection does not necessarily mean the effective date. I could inspect on 7/1 and finish the inspection from my desk on 7/3 and call the effective date 7/3

So, your comp closed 2 days after your physical inspection? Do a quick final desktop look at the subject and voila...it's now a later effective date and you also happen to have a nice new closed sale for the report. Anybody can whip a salesman!

 

[J Grant]

You're the appraiser. You give it as much weight as you are shown that it has. You don't need to call it a closed sale to do that.

YES to this

But on the other hand (as far as the effective date), I've taken more than one day to inspect...and the conclusion of my inspections became my effective date. The day of the physical inspection does not necessarily mean the effective date. I could inspect on 7/1 and finish the inspection from my desk on 7/3 and call the effective date 7/3
So, your comp closed 2 days after your physical inspection? Do a quick final desktop look at the subject and voila...it's now a later effective date and you also happen to have a nice new closed sale for the report. Anybody can whip a salesman!

NO the second, 100% NO. You got it right the first time, weight or factor a pending in if you want to. If someone called it a closed sale, at worst it would be misleading . With disclosure, maybe not...a gray area ?. But inventing a later eff date of a drive by...(bought up before on this thread, ) that might be construed as fraud. I said might because fraud is more complex issue than misleading, but why even go there.

If you do a drive by to move the effective up to a later date on an interior inspection assignment : 1). it is misleading because the statement about effective date is you made an interior inspection on that date 2) you would need to disclose a prior appraisal service ( your interior inspection date 2 days earlier). A home owner or RE agent may remember your being inside the property the earlier date .. why risk it? If it is critical to have that one closed comp, explain to client and schedule a new inspection for a new effective date ...or just keep it as a pending, it is what it is, The as of effective date is the cut off date for market data activity status.. the period after effective date up to signature date is to analyze the data and write report, not to invent new effective dates or change the status of data as it existed as of the effective date .

 

[residentialguy]

1). it is misleading because the statement about effective date is you made an interior inspection on that date 2)

Please show me the link that specifically narrows it down to the interior.
And you don't have to do a drive by....if so, what is the effective date of a desktop appraisal? What day is the effective date on a complex that takes a week to inspect? Don't be so trapped by the walls you've created. 100%