Comp Sale appears to be below market value?

[EddieB]

The OP is from North Carolina, and I can't speak to all markets. But 28 DOM is a quick sale in all of my markets and submarkets. Every county I cover has a 2%-5% higher unemployment rate than national figures. Pretty rough in our beautiful state right now.

 

[J Grant]

If the OP bothered to post typical marketing times might help those trying to help him. Easier to rely on a realtor's statement? He said the surrounding sales are not "good comps" with no explanation why they are not good comps.

 

[EddieB]

It seems some people take everything a realtor says as gospel and if a realtor says it sold below market , that is the way the appraiser thinks and shapes the report around this statement from a realtor.

True, and not to bet up on realtors but some are making my job nearly impossible. Their REO pricing is all over the place with little to no rhyme or reason. They provide one exterior photo, state "as-is" condition and phone calls offer little advise.

I deal with many realtors and this is my experience with 50/50.

 

[EddieB]

And how is this UAD thingy going to help when the appraiser is the only one required to accurately describe the interior condition of a property.

Okay, I'll get off my box this morning.

 

[JSmith43]

Direct quote-Fannie Selling Guide:

The appraiser is responsible for determining which comparables are most appropriate for the assignment. Fannie Mae expects the appraiser to account for all factors that affect value when completing the analysis. For example, if the appraiser believes a foreclosure sale or a short sale is an appropriate comparable, then the appraiser must identify and consider any differences from the subject property, such as the condition of the property and whether any stigma has been associated with it. The appraiser cannot assume it is equal to the subject property. A foreclosure or short sale property may be in worse condition when compared to the subject property, especially if the subject property is new construction or was recently renovated. The appraiser must conduct the proper research in order to complete the assignment and provide an accurate opinion of market value.

Much of the time it is hard to identify interior condition of an REO through the listing agent since they handle so many of them. A better bet is to hunt down the selling agent, (good luck, in many cases!).

 

[CANative]

Fannie would have done better to edit out the middle of that. Maybe something like:

The appraiser is responsible for determining which comparables are most appropriate for the assignment. The appraiser must conduct the proper research in order to complete the assignment and provide an xxsnipaccuratesnipxx credible opinion of market value.

 

[Metamorphic]

I'll leave the analysis and weighting to you as I can't make an informed decision from where I sit.

That stated, not every "sale" is a (good) "comp".

I dont know how it works in your work process, but when I have experienced the OPs situation, I usually already have a bunch of time invested in the comp. I've shot the picture, taken notes, downloaded all the work file data, and have put all the info into the grid. At that point it would be more work to take it out than leave it in. But even if that were not the case. I believe these comps have value in the appraisal because they demonstrate for the reader the forces at work in the market. The provide for both the reader and the appraiser the kind of native understanding of the market that cannot really be had any other way. They also demonstrate the appraisers diligence in research and reporting, and can quite possibly save you some grief on review.

 

[JSmith43]

Fannie would have done better to edit out the middle of that. Maybe something like:

My favorite part is this:

Fannie Mae expects the appraiser to account for all factors that affect value when completing the analysis.

Fat chance. How many appraisers even really have a grip on the value definition let alone all the economic nuances that may affect value? The best economists that the GSE's might retain or employ would have a hard time designing a computer simulation illustrating a way to comply with that statement, let alone go it an assignment at a time.

The best appraisers can really deliver is a reasonable opinion of MV derived from a reasonable investigation & development.

All factors? Get real! The standard should be that the appraiser is to give it a good go and if the client is concerned, the client can keep ordering new opinions of value until their statisticians can plot a curve with the results, if the wish.

The only thing at risk should be the fee paid to the appraiser, if significant factual errors can be demonstrated. That should be part of the contract. At that point, all the hall monitors could get new jobs or seek new hobbies, blood pressure would go down on average & productivity would skyrocket.

 

[Rob Baum]

I haven't read every response, but why wouldn't you find and call the seller, then call the buyer. You have already talked with the listing agent; if the buyer agrees that he thinks he got a good deal (perhaps he can give you an appraised amount), and the seller agrees that they just wanted to get rid of it, then I think you have a strong case for a condition of sale adjustment, supported by your interviews of the buyer, seller, agent, and possibly another appraiser.

 

[J Grant]

I haven't read every response, but why wouldn't you find and call the seller, then call the buyer. You have already talked with the listing agent; if the buyer agrees that he thinks he got a good deal (perhaps he can give you an appraised amount), and the seller agrees that they just wanted to get rid of it, then I think you have a strong case for a condition of sale adjustment, supported by your interviews of the buyer, seller, agent, and possibly another appraiser.

No matter what the buyer/seller thinks, the price is only a good deal, or at the lower range of value, when compared to other comparable sales. Unless the subject is so unique, there are other area competing size/type/appeal recent homes sales, and the appraiser has to see what they sold for, and then the appraiser can see with both the adjusted and unadjusted prices, whether the comp in question sold for more or less or equivalent price then similar comps.