Complaint from State of Michigan

[ZZGAMAZZ]

the story is missing something... if no changes were made to a subject it is a "perfect match " in property characteristics, but that means no characteristics superior or inferior to compare with to extract value - That leaves only its prior price which now is there as a benchmark - what if the prior sale paid high or low, what kind of benchmark is it then, and then what about any changes in the market since then - I don't know Michigan but OP made time adjustments, in many regions or states market was flat all year when interest rates were higher ( true here, just bouncing back now after a year flat)

OP ::My report used the subject as a comparable and adjusted for the updates and time . Time adjustments will stick out like a sore thumb on a 1.5 year old subject prior sale so better be well supported and then there are updates- If subject had substantial updates , making it a different condition/appeal now, why is it still a good comp ? ( though there may be other issues with report who knows ) As with anything else, using a subject prior sale as a comp might be skillfully used by some appraisers, and a mess by others.

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A mini-grid that addressed the respective selling prices of the subject during an 18-month period would be a welcome, atypical, and presumably supportive, entry into the Market Analysis narrative.

 

[Andrei Fin]

what if the prior sale paid high or low, what kind of benchmark is it then

But how is that different from any comp? A purchase is unsupported by the appraisal... buyer brings cash or maybe the appraiser pushes the value and it closes anyways... now that comp is a benchmark for other purchases. And if you want to call it an outlier, exactly how out does it have to be?

 

[ZZGAMAZZ]

But how is that different from any comp? A purchase is unsupported by the appraisal... buyer brings cash and it closes anyways... now that comp is a benchmark for other purchases. And if you want to call it an outlier, exactly how out does it have to be?

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The short answer, as a double-entendre, is "Far Out." The medium-length answer pertains to the fact that outliers are an acceptible aspect of statistical analylsis, absent any requirement to 'splain exactly why they are so distant from the median, leading to the long version: quantitatively, a pre-determined distance from the center of normal distribution, measured in standard deviations, could logically be determined as an outlier, athough we're appraisers rather than social scientists, although I'd prefer to have a plausible answer to explain why I made any decision expressed in writing in a report.

 

[J Grant]

But how is that different from any comp? A purchase is unsupported by the appraisal... buyer brings cash or maybe the appraiser pushes the value and it closes anyways... now that comp is a benchmark for other purchases. And if you want to call it an outlier, exactly how out does it have to be?

Each comp has its own closed price, and appraiser's reconciliation of value and price for each is part of the SOW..

Moving on, the subject comes with baggage because it IS the subject. Aside from the fact that we already analyze a subject prior sale, putting on it on the grid makes a spotlight shine on that prior price. problem.

Let's say for simplicity the subject had no changes/upgrades since prior sale, and it sold 12 months ago for 200k. Since there are no property characteristic adjustments to extract value from, it leaves only the price. Which brings up a host of questions, aong them "did subject sell for "market vlaue" 12 months ago? Can only say that by doing a retrospective 12 month old date appraisal on it. What if buyer over paid or under paid 12 months ago, then what do you do with the price.... besides the owner upset if you appraise it "lower " than 12 months ago, the UW will ask did the market decline?( because it appraised for less ). Those questions might still arise subject is not put on grid, but using it as a comp brings those issues center stage into the appraisal

 

[ZZGAMAZZ]

---
The short answer, as a double-entendre, is "Far Out." The medium-length answer pertains to the fact that outliers are an acceptible aspect of statistical analylsis, absent any requirement to 'splain exactly why they are so distant from the median, leading to the long version: quantitatively, a pre-determined distance from the center of normal distribution, measured in standard deviations, could logically be determined as an outlier, athough we're appraisers rather than social scientists, although I'd prefer to have a plausible answer to explain why I made any decision expressed in writing in a report.

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And 30 secords later I pick up a book with an advertisement for another book inside the front jacket: Outliers, by Malcolm Gladwell, seemingly about how weird people often are successful in life...

 

[J Grant]

And if you want to call it an outlier, exactly how out does it have to be?

For a market value purpose appraisal, a property whose price/terms make it an "outlier" is typically excluded as a comp, We are looking for "market value", not "outlier value".
Market value is defined as "the most probable price." It is not defined as the "least probable price" - ( an outlier price) .

If subject prior sale turns out to be an outlier, it is not our appraisal problem-leave that sale in the past, aside from obligation to provide a prior sale of subject analysis. .

 

[jay trotta]

I did an appraisal of a waterfront property for an AMC. The subject had been recently purchase about 1.5 years earlier. My report used the subject as a comparable and adjusted for the updates and time. The subject previous sale was an arms length sale. The AMC had someone to come in and appraise the property for 100k more than the sale 1.5 years earlier. My sale was 50k higher than the subject sale 1.5 years ago. The AMC filed a complaint and my E&O company assisted with me in getting an attorney to respond. Now the Attorney General of Michigan is pursuing the matter further. It is to the point where my the AMC is going for blood, because I would not give them the higher value. I did 50+ appraisals for this AMC over a 2 year period and now this over 1 report where I would not give them the value they wanted. My E&O (Navigators Insurance) may not help me at this point, but I was checking to see if anyone had any suggestions for me now since I may have to represent myself and defend my report in court.

It depends, the "other appraiser" appears to be $100k over the 1.5 yr - You noted $50k over the same time period, for the updates
Without seeing both reports, it would be difficult to determine the $50k differential

Why would your E&O carrier drop the case ?? That's why you have "E&O" Insurance, somethin ain't right here....

Need a whole lotta additional info here, OR we could use the SWAG methodology program

 

[ZZGAMAZZ]

It depends, the "other appraiser" appears to be $100k over the 1.5 yr - You noted $50k over the same time period, for the updates
Without seeing both reports, it would be difficult to determine the $50k differential

Why would your E&O carrier drop the case ?? That's why you have "E&O" Insurance, somethin ain't right here....

Need a whole lotta additional info here, OR we could use the SWAG methodology program

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BTW, the following excert is from the CA Burea of Real Estate Appraisers Practice Act, Chapter 4:


(g) Nothing in this section prohibits a person or entity acting in the capacity of an appraisal
management company from doing any of the following:
(1) Asking an appraiser to do any of the following:
(A) Consider additional, appropriate property information, including information
about comparable properties.
(B) Provide further detail, substantiation, or explanation for the appraiser's value
conclusion

 

[ZZGAMAZZ]

----------------

BTW, the following excert is from the CA Burea of Real Estate Appraisers Practice Act, Chapter 4:


(g) Nothing in this section prohibits a person or entity acting in the capacity of an appraisal
management company from doing any of the following:
(1) Asking an appraiser to do any of the following:
(A) Consider additional, appropriate property information, including information
about comparable properties.
(B) Provide further detail, substantiation, or explanation for the appraiser's value
conclusion

------------------------------------

Wondering whether--because the BREA legitimises the authority of an AMC to request additional data--an appraiser's failiure to comply would be considered a state violation.

 

[Amy Perkins]

You should get the advise of an attorney, at least consult with one. You need to do some regression analysis and get some matched pairs. Maybe you should have a review done of your own appraisal. Judges won't listen to the public most of the time. They only want to hear it from an attorney. I'm not an attorney.