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Comments on Declining Value Help

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Maveric33

Thread Starter
Sophomore Member
Joined
Apr 18, 2007
Professional Status
Licensed Appraiser
State
California
Hey All,

I have an underwiriter who wants me to make the exact comment "The appraiser took the decline in value into account when assigning value to the subject property". Has anyone else been asked to do this? Are there any pitfalls for going either way. This is an FHA Reverse mortgage.

Please let me know.
 

ZZGAMAZZ

Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
IMHO:

I would agree to do so, because I probably would have done so; and if so, I would have explained my rationale.

I'm in the habit of summarizing my rationale for establishing my opinion of value--unless the spread of adjusted values is so tight that there's little if any deviation.

If you have, indeed, defined the local market in which the subject exists as "declining," then that factor must have come into play somewhere within the SCA.

When I realized that I inevitably took great umbrage at any comments from underwriting without giving myself an opportunity to think clearly about whether the stips might be accurate, I decided to do everything possible to avoid the mental confrontation. I haven't received a condition or request in 6 months, or a couple of hundred reports, because I "explain" everything I've done, after I do it. Takes a lot more time but in my opinion, we're responsible to sell/promote our product, e.g., the appraisal report...
 

Lloyd Bonafide

Senior Member
Joined
Jan 15, 2006
Professional Status
Certified Residential Appraiser
State
California
If you stated that the market is declining in this area, and if you made negative time adjustments to reflect the approximate amount of the recent decline, then I would feel comfortable in stating that you took the decline in value into account when arriving at your value.
 

Maveric33

Thread Starter
Sophomore Member
Joined
Apr 18, 2007
Professional Status
Licensed Appraiser
State
California
Declining Market

Thanks for your response. I actually put that it was stable, 3-6 & in balance. We have so many different markets in So-Cal. The county is San Bernardino. I went back & explained the decline to stable & hope it goes through. This is for a Reverse Mortgage & it may be 10 years before the bank has to sell the property. I could understand the underwriters condition if for declining value if the loan were conventional.

Thank you!
 

Annelle

Junior Member
Joined
Jan 26, 2004
Professional Status
Certified General Appraiser
State
Arizona
I think that so many people just assume that all market areas are in a decline. I have noticed pockets where that is not the case. Naturally, I never make any assumptions about any area, and every appraisal is a case by case analysis. So far every appraisal that I have done recently with a stable market, I make sure that I have addressed it, with supporting "evidence" in the appraisal. I did an appraisal recently that when I was researching it found all the similar properties to the subject all sold within 1% of their list price in the last 12 months, and one recent comparable actually sold for 1% more without any consessions. I was a little surprised. I did however, address the decline in some of the smaller, older properties in the adjacent neighborhoods. Those properties have a different market appeal, and finacial lending considerations. The subject was a 4,000 sq ft home on horse approved zoning, and a view, and was paid for cash.

Were there neighborhoods adjacent in a decine? Or properties in the subject neighborhood that are in foreclosure?
 

Dominic

Sophomore Member
Joined
Jan 23, 2006
Professional Status
Licensed Appraiser
State
California
Thanks for your response. I actually put that it was stable, 3-6 & in balance. We have so many different markets in So-Cal. The county is San Bernardino.

you found a stable pocket in San Bdo County? where?
 
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Dominic

Sophomore Member
Joined
Jan 23, 2006
Professional Status
Licensed Appraiser
State
California
I went back & explained the decline to stable & hope it goes through. This is for a Reverse Mortgage & it may be 10 years before the bank has to sell the property. I could understand the underwriters condition if for declining value if the loan were conventional.

Thank you!

is the market stable, or is it declining?... how does the type of loan influence whether the market is declining or stable?
 
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TCWILKE

Freshman Member
Joined
Dec 6, 2005
Professional Status
Certified Residential Appraiser
State
California
Try looking at DataQuick site http://www.dqnews.com/ZIPLAT.shtm and you will get a break down by zip code for San Bdo County for the performance in the past year, you can also get a 2006 vs 2007 report. I use this sight all the time to support declining/stable or increase in value.
 

ZZGAMAZZ

Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
TCWILKE: I used DataQuick for a couple of years before I realized that the "market" we are required to analyze, e.g., on page 1 of the 1004, is much more segmented that the zip code- or city-related data provided by DataQuick. I think it's an interesting source for general conditions, which should be cited, but I'm also certain that the market analysis requires more research, development, and reporting...
 

TCWILKE

Freshman Member
Joined
Dec 6, 2005
Professional Status
Certified Residential Appraiser
State
California
I agree with ZZGAMAZZ, DataQuick should be used as a "General Market" Analysis as it is heavely weighted by number of sales in a particular zip code and might not be reflective of your immediate market area. But, it is a good starting point. If DataQuick reflects a declining market and a high number of sales in your zip code, and you are checking the "stable and/or in balance" box in the report, you will need to research, develope and support that position, in contrast to what DataQuick or any other data source is reporting. As always, use multiple sources to support the market analysis.
 
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