Completed an appraisal yesterday.

[The Sheriff]

The property was purchased as new construction from the builder in March of 2007. Ran the decline in the neighborhood, and it demonstrated about 0.5% per month as the property was in an adult active community. I wanted to say the house was about $405K when it was all said and done, but my actives really forced me to bring it down to $395K. Either way... then $10K difference is not the issue. The owner paid $501K in 2007. No matter how you run the time adjustment, the property should be worth more than where I'm bringing it in at if the original value wasn't garbage. The owner is a Michigan grad, as is the wife, and the daughter who is now a lawyer. All of them have their sh*t together in other words. They will very well read my report and will come to the same conclusion I did (they got F'ed in the buying process by the builder and the builder's lackey appraiser). There were two MLS resales of idential model matches at the time as well. The one on the golf course sold for $500K (less than subject). The one not on the golf course sold for $435K (two weeks before the subject closed). Of course, the subject is NOT on the golf course. Similar upgrades for both of these sales. Also, the owner placed $100K down. I went back a full year just to see if anything supported the sales price on the MLS... nadda, zilch, not happening bucko. But, I damn well know the builder sales would conclude value was a go. I'm sure you know where I'm going with this...

Potentially, offer the client a retrospective appraisal or a retro review of the original report as he darn well is going to be ****ed about losing $100K when it should maybe be 1/3 of that amount (in today's dollars). This could lead to a whole subdivision of potential clients knowing the builder ran with skippy the number hitter from a certain AMC some of us utilize on here. At the same time, we can push another number hitter out the door because my next step will be to the state board. I'm sick of doing reviews and seeing some established shop getting the work because they make things happen. I don't know... I've made phone calls to other appraisers when I've done a review that I agreed with because it got really old cutting everything that came in the door.

Just my rant for the day.

 

[PropertyEconomics]

The property was purchased as new construction from the builder in March of 2007. Ran the decline in the neighborhood, and it demonstrated about 0.5% per month as the property was in an adult active community. I wanted to say the house was about $405K when it was all said and done, but my actives really forced me to bring it down to $395K. Either way... then $10K difference is not the issue. The owner paid $501K in 2007. No matter how you run the time adjustment, the property should be worth more than where I'm bringing it in at if the original value wasn't garbage. The owner is a Michigan grad, as is the wife, and the daughter who is now a lawyer. All of them have their sh*t together in other words. They will very well read my report and will come to the same conclusion I did (they got F'ed in the buying process by the builder and the builder's lackey appraiser). There were two MLS resales of idential model matches at the time as well. The one on the golf course sold for $500K (less than subject). The one not on the golf course sold for $435K (two weeks before the subject closed). Of course, the subject is NOT on the golf course. Similar upgrades for both of these sales. Also, the owner placed $100K down. I went back a full year just to see if anything supported the sales price on the MLS... nadda, zilch, not happening bucko. But, I damn well know the builder sales would conclude value was a go. I'm sure you know where I'm going with this...

Potentially, offer the client a retrospective appraisal or a retro review of the original report as he darn well is going to be ****ed about losing $100K when it should maybe be 1/3 of that amount (in today's dollars). This could lead to a whole subdivision of potential clients knowing the builder ran with skippy the number hitter from a certain AMC some of us utilize on here. At the same time, we can push another number hitter out the door because my next step will be to the state board. I'm sick of doing reviews and seeing some established shop getting the work because they make things happen. I don't know... I've made phone calls to other appraisers when I've done a review that I agreed with because it got really old cutting everything that came in the door.

Just my rant for the day.

Sheriff .. if I were you I dont think I would do the retrospective but rather refer it on to someone you know and trust. At this point there could be a case made you are not without bias, even though you and I may well know you arent. Its the perception that you could be that could harm your clients case. I would advise the client to call this person or this person and ask them to do an independent retro review and / or appraisal and let one more set of eyes confirm what you are thinking.
In the long run it would be much better in a court case becuase there are two appraisers that agree what current and retro values are / were.
Just my thoughts.

 

[The Sheriff]

Thanks for the advice... I will heed that as well and actually my gut feeling said the same thing.

 

[CindyR]

Mr Sheriff - are you doing a current appraisal on this property? Perhaps you are too focused on the 2007 value? Yes you must analyze the prior sale of the property as it relates to your current opinion of value but you are not, at this point, appraising it last year when they bought it.

And surely you are not surprised that the builder's appraisers can support the sale price of every single contract they see no matter what the market is doing. There is a whole army of appraisers out there who believe their misson on this earth is to support that sale price no matter what they have to do to make it work. I know, I see them every day...

 

[The Sheriff]

Cindy... The problem with my appraisal from the owner's perspective is that I identified a 0.5% decline in his subdivision (Trilogy). Utilitizing this logic, he questioned with a decline rate at that percentage, why shouldn't his value be approximately $50K higher than where I came in at. When looking at his builder March sale in 2007 at $501,zzz, a model match sold for $435,000 five days before he closed. He called me and stated the date on that original appraisal was 2/12/2007. Appraiser came in at $502K. The model match property was active at $450K on 2/12/2008 and had been on the market roughly 150 days and actually got lowered on the same day to $435K. The property was just as upgraded as the subject and had full landscaping (subject had no landscaping). The signed date of the report is 2/14/2007. So, we both know the appraiser saw this property out there and steered away from it.

Instead, he utilized a pending sale on the golf course that was at $499K to support the value (it actually closed for $475K). The other two MLS sales was a golf course property that sold for $500K, and a non-golf course that was smaller that sold for $395K. He brought the golf course properties down with a view adjustment, but then he brought them up with upgrade adjustments of about $35K (the photos show the interior being just as nice as the subject - they are tract homes). He brought the non-golf course up $30K for upgrades. All the upgrade adjustments were in the basement line to avoid commenting on them.

He used one builder sale to support value as well (go figure, right).

The owner should have recourse against the appraiser. The owner placed $100K down on his house under the assumption he was paying for it at market value. He recognizes the market is down, but he shouldn't be down his full $100K plus his recent improvements to the property if the original report was done appropriately.

I'm going to work on the owner in getting that report. I want to see the appraiser eat it for sleeping with the builder on this non-sense. I may not do a retro review (essentially I have though without utilizing paper). However, there should be nothing wrong with sending it to the board with MLS sales and a big question mark asking how was this property appraised for $502K? This owner is F'd big time and it is because some appraiser didn't have the nads to say he wasn't playing ball. Just sick of it and sick of people being ****ed at the new messenger (you never know when you might run into these owners of properties down the road). I don't want my name tarnished for doing honest work (and cleaning up the mess of others).

 

[PropertyEconomics]

Cindy... The problem with my appraisal from the owner's perspective is that I identified a 0.5% decline in his subdivision (Trilogy). Utilitizing this logic, he questioned with a decline rate at that percentage, why shouldn't his value be approximately $50K higher than where I came in at. When looking at his builder March sale in 2007 at $501,zzz, a model match sold for $435,000 five days before he closed. He called me and stated the date on that original appraisal was 2/12/2007. Appraiser came in at $502K. The model match property was active at $450K on 2/12/2008 and had been on the market roughly 150 days and actually got lowered on the same day to $435K. The property was just as upgraded as the subject and had full landscaping (subject had no landscaping). The signed date of the report is 2/14/2007. So, we both know the appraiser saw this property out there and steered away from it.

Instead, he utilized a pending sale on the golf course that was at $499K to support the value (it actually closed for $475K). The other two MLS sales was a golf course property that sold for $500K, and a non-golf course that was smaller that sold for $395K. He brought the golf course properties down with a view adjustment, but then he brought them up with upgrade adjustments of about $35K (the photos show the interior being just as nice as the subject - they are tract homes). He brought the non-golf course up $30K for upgrades. All the upgrade adjustments were in the basement line to avoid commenting on them.

He used one builder sale to support value as well (go figure, right).

The owner should have recourse against the appraiser. The owner placed $100K down on his house under the assumption he was paying for it at market value. He recognizes the market is down, but he shouldn't be down his full $100K plus his recent improvements to the property if the original report was done appropriately.

I'm going to work on the owner in getting that report. I want to see the appraiser eat it for sleeping with the builder on this non-sense. I may not do a retro review (essentially I have though without utilizing paper). However, there should be nothing wrong with sending it to the board with MLS sales and a big question mark asking how was this property appraised for $502K? This owner is F'd big time and it is because some appraiser didn't have the nads to say he wasn't playing ball. Just sick of it and sick of people being ****ed at the new messenger (you never know when you might run into these owners of properties down the road). I don't want my name tarnished for doing honest work (and cleaning up the mess of others).

Sheriff ... your research appears to be very well done, in fact Id do just a bit more to make sure you were right if I were you. Then, as I stated before, I would recommend this to another appraiser you trust, or two other appraisers and let the owner select who they wish to do the retrospective review.
Then, and I fully understand this, your tone turned quite angry. That my friend will serve no one, especially you. Set this down a few days and let the anger subside. This is a business we are in and using phrases like "... I want to see this appraiser eat it ..." do not serve our profession well. Its simply a business transaction in which a borrower was harmed. I dont make light of that and I dont take that lightly, however, this situation demands professionalism and whether the appraiser "eats it" or not should not be any of your concern or your goal. The issue here is our profession is full of appraisers that have hit numbers and in some instances, have harmed people. The goal in that situation is to let truth prevail and let the system work as it should. Put the anger aside, gain back your professionalism, and refer this on knowing you are right.
Truth will always prevail over lies ... it may take some time however, and patience is a virtue. Im sure you will handle this correctly.

 

[Peacemaker]

Cindy... The problem with my appraisal from the owner's perspective is that I identified a 0.5% decline in his subdivision (Trilogy).

Taking a macro number (subdivision as a whole) and applying it to one house can be dangerous from a statistical perspective. I always run the numbers for the subdivision as a whole, then pull a second set of data filtered to the submarket of the individual property (similar square footage, no view or view, pools/no pools, whatever is appropriate, however tight you can get it but still get a decent sample size). You may get two completely sets of data, and find a different rate of decline that is more applicable to the Subject property. You might not either, but I would want to check, before I hang my hat on a value derived from a generalized rate of decline.

And Sheriff, as much as I wish the owner had recourse against the original appraiser, there is case law in AZ supporting that he/she does not. I understand your rant, and that you are just venting here, and I share your aggravation. But don't let that turn you into an advocate for the homeowner.

 

[PropertyEconomics]

Taking a macro number (subdivision as a whole) and applying it to one house can be dangerous from a statistical perspective. I always run the numbers for the subdivision as a whole, then pull a second set of data filtered to the submarket of the individual property (similar square footage, no view or view, pools/no pools, whatever is appropriate, however tight you can get it but still get a decent sample size). You may get two completely sets of data, and find a different rate of decline that is more applicable to the Subject property. You might not either, but I would want to check, before I hang my hat on a value derived from a generalized rate of decline.

And Sheriff, as much as I wish the owner had recourse against the original appraiser, there is case law in AZ supporting that he/she does not. I understand your rant, and that you are just venting here, and I share your aggravation. But don't let that turn you into an advocate for the homeowner.

Wendy .. I dont know AZ caselaw .. however, I do believe that all persons who assist in fraud can be held liable. Its one thing to say a homeowner is not an intended user of a report, however, its quite another when the property owner has been harmed by fraud.
Im not saying there is fraud here, I simply do not know, and I certainly agree with your comments about research and analysis (its why I suggested more analysis by the Sheriff to further support his conclusions), however, should it be found that fraud is involved, ALL INVOLVED, will be held accountable I believe, even the appraiser.
And your points on advocacy should be very well heeded ... they are very very valid comments and I, for one, appreciate you making them.

 

[Peacemaker]

Your point is taken, PE, but I guess I'm beyond holding out hope for AZ. Interesting article about the case I referred to, should anyone want to read it. Pretty similar situation, seems like.

http://www.stoopsazlaw.com/2004 PDF...y - claims against appraisers - July 2004.pdf

 

[The Sheriff]

I guess the question really is... where is the fraud line in an appraisal? Is it 5%, 10%, 15%? I'm Type A when it comes to my job... and I could clearly destroy the original report in a review if it came my way as could a respectable reviewer that cares (at the same time, I know when I look at my own report and other reports that there is always room to go higher or lower within a reasonable percentage (we are not an exact science unfortunately... 5% has typically been my variance on reviews))... but at what point does the state say the value got pushed too much to make a deal work for the builder. Should the owner have paid only $450K instead of $501K? I really wish laws were more concrete on these issues. Is it worth my time? Well... considering I like our profession no matter how crooked it leans at times, I feel it is worth my time. I will utilize the suggestions of others on here and recommend a secondary firm to review the report if the owner calls me back. I know where I personally stand... I realize the owner took it in the shorts (and I could appropriately develop a report without letting personal feelings into it). However, I don't ever want to end up on a witness stand getting grilled by a lawyer asking if I believe that the appraiser should be disciplined to the extent he should repay the owner the difference between market value at the time and what the owner paid (approximately a $51K difference). I believe we should accept responsibility for our value conclusions... especially if data is out there that is clear as day contradicting what was reported.

And to think... all this for $300 on the original report. Pathetic.

End of rant.