comp values in nondisclosure state

[utah buyer]

There are comparable single family houses that have sold in the last couple months for a high amount and yet the owners will not disclose the closing docs. How could the appraiser use these homes as comps?

BTW, I appreciate you guys allowing people like me post questions and this forum is very interesting.

 

[Terrel L. Shields]

Bribery....?

Actually, the Multilist should have the info unless the seller has a non-disclosure clause. Thus, an appraiser can get that info...maybe. But if simply searching to cherry pick the highest sales ....hmm, I donno if that helps accurately value another property.

 

[utah buyer]

Thanks for responding.

The buyers have NDAs and agents/brokers omit from MLS accordingly. Some houses are in the 800k+ range, but highest MLS published is 560k and a 650k is now over one year old. I just spoke to an owner tonight and he agreed to disclose construction cost to the appraiser. His cost is higher than mine and mine higher than others that have disclosed.

Will the appraiser need closing documents or just verification from buyer?

Is it true that highest sale in the market within a year is the absolute ceiling because everything else is considered over-built?

 

[Restrain]

A HUD1 is easily fabricated and is often the basis for fraud. This is why third-party verification is needed. Honestly, in Non-disclosure states, MLS is the source. If an appraiser has an 'in' with a high-dollar agent, he can get some confidential info. In DFW, MLS eliminated NDS listings.

 

[Joe Flacco]

Is it true that highest sale in the market within a year is the absolute ceiling because everything else is considered over-built?

NO .

 

[Elliott]

Utah Buyer,
I'm not from a NDS, but your questions made me curious. "How do appraiser's work in those states?" I assume they have their methods, but I really don't know.

I did a quick and dirty search of the internet, and did find this:

http://www.hoffleigh.com/blogs/salt...state-the-fallacy-of-the-non-disclosure-state

Hopefully an appraiser from Utah will enlighten us.

 

[George Hatch]

The definition of value used in these appraisals includes assumptions that result in the appraiser using the perspective of the "typical buyer" who is reasonably well informed or well advised. If the typical buyer in your area couldn't know about these sales then they probably shouldn't be used in an attempt to reflect that perspective anyway.

No appraisal can be better than the available data.

 

[Terrel L. Shields]

Missouri, NM, etc. same issues. "Construction costs" won't cut it. That's not a sale. It isn't kosher to add a land sale to a building sale.

The problem appears in part to relate to your purchase of what I am presuming to be some sort of development? If so the builder/owner appears to be deliberating withholding the actual sales prices to blindside the bank and/or buyers of homes. Therefore, the prices are quite possibly inflated. As an appraiser, I would simply walk from such a project.

Further, if this is just such a purchase, such a place with obfuscated pricing is almost always going to be an inflated sale and when you go to re-sell expect to sell for less than you bought it for.....a lot less.

 

[George Hatch]

It all comes down to whatever comprises the typical manner of exposure for such properties within that market. If it's one of those closed environments where a few brokers are doing all the deals then they are the only ones who actually "know" what's going on. If your broker isn't one of them then they're on the outside and you're at the disadvantage.

Where it can be to their disadvantage to control that information so tightly is when their transactions need a mortgage lender to front the funds to the buyer for the purchase - the valuation of that collateral is where we come in and we are compelled to work with whatever the level of information that's available to us during "the normal course of business". That level of info varying from one market to the next.

Just "knowing" a sale price doesn't do that much for us in and of itself unless we can verify both the price and the property attributes to the satisfaction of our users. Simply knowing a home sold for $800k doesn't do much for us unless we know how big it is, how old it is, what the construction quality and condition is and what the terms of sale were.

A sale we can't verify or can't analyze due to too incomplete in these other details is basically useless to us beyond what it enables us to say about neighborhood pricing ranges in general.

 

[utah buyer]

thanks for further posts

thanks for taking the time guys and I appreciate the vast knowledge.

The area I just built in is rural in the custom home market segment although not exclusive high end million dollar homes. Since it takes about a year to complete a house--from design, permits to COO on a custom home--, the comps get somewhat dated and appraisers have normal difficulty obtaining comps in non-disclosure state. You can't run to county records for verification. We all can see other houses being built and know and find out what others are paying, but seem to have trouble finding appraisers like yourselves that do their homework and stay up with actual standards vs misconceptions since Dodd, Frank. Your jobs can be difficult to say the least and I also see you guys are highly scrutinized with portal submissions and corresponding quality review software. So you guys have to be on you toes and consistent in your application of data.

I have verified many misconceptions by researching this forum. ie, the highest appraisal for a home can be no higher than the last highest sale in the area.--a house just sold for 560k, so that is the new ceiling--. Or you can't use a comparable across a county line, even if it is close and otherwise comparable. seriously.

In the world we live in, privacy is an illusion even in Utah. The data is there if it can be found and verified. As you all know, appraisals are loaded into the Fannie Mae portal in most cases and lenders can access that information along with actual sales information even though it would seem appraisers can't.

Through personal experience as a homeowner, I have found MLS data to be about as accurate as zillow in Utah.

I found this post to helpful: Lender Letter LL-2014-02: Property and Appraisal Requirements for Properties Located in Small Towns and Rural Areas.

learning also that a lender does not need to blindly rely on submitting to an AMC and can specify an appraiser who knows the specific market area.

I was also able to find the Fannie Mae appraisal guidelines that include language like, appraiser can verify by viewing certain documents from a disinterested source.--paraphrasing--

I can see from further posts that the appraiser needs detailed info that can be verified and I can see the points on development fraud. I do also recognize that I might take a loss if I need to sell the house and every home buyer should realize that an appraisal does mean you can automatically sell a house for that amount.

As a consumer, I feel the need to be educated to make sure my lender is using a qualified appraiser and do so without exerting undue influence. I plan to simply ask the appraiser assigned how they apply and source comparables in a rural environment. My new lender does many rural loans even though it is a large bank being Wells Fargo. I would appreciate thoughts on how I could better approach that verification of the appraiser's knowledge and experience to the market area.

Thanks again.