Considering filing complaint for lack of market conditions adjustment on stale comps

[throwaway12345]

Lenders aren't oriented or expect an appraisals to support contract price resulting from multiple offers over list. They expect a selection of previously sold properties with typical exposure to the market which are are similar to the subject in age, condition, location, living area, and other amenities.

I never once asked them to support a contract price, but agree that shouldn't be their goal. If an appraiser is provided with multiple offers over list, my assumption is that it would be treated as a data point that is useless for supporting a conclusion on its own but can be considered in the context of other data in the market.

I did not disagree with the comp selection, they were similar in age, condition, location, living area, and other amenities. My entire argument is that the sales are dated (closed 8-10 months ago) and therefore require a market conditions adjustment based on publicly available market data that I provided to the lender.

 

[Fernando]

I noticed agents in a ROV ask me to consider comps outside the neighborhood.
I don't know what comps you have but are they in different neighborhoods? different school districts?

 

[CGinMN]

There are people here giving an opinion of a peer’s work without having reviewed said work and that strikes me as somewhat unethical.

You asked for a loan, the bank gave you most of it, you’re fortunate enough to have the money to make up the difference, you negotiated a lower price, your beef has been aired here and sensible professionals have validated your frustration. Maybe stop there and don’t mess with two appraisers’ livelihood. Enjoy your evening, enjoy living in paradise, enjoy your new home, and move on.

 

[Alsie35]

*SNIP* My entire argument is that the sales are dated (closed 8-10 months ago) *SNIP*

My eyebrow went up when I read that. Yikes! I understand that in some markets you just can't find anything more recent ... but ... I don't think I've ever based a value on only dated comps (over 6 months). I can't say more without being familiar with the market and seeing what is out there ... of course you are talking about smaller and more limited markets due to the small population of the islands, and location/views are HUGE factors in a place like Hawaii so that shrinks the pool of similar sales further ... you've said you agree with the comp selection so it doesn't sound like he missed using any recent sales, but .... yikes ... to not have a single recent sale on the grid ... I wouldn't want to be in his shoes. As a general matter in a case like this I would personally present a very detailed market analysis if I saw that there might be an issue raised re: appreciation ...

 

[Fernando]

There are people here giving an opinion of a peer’s work without having reviewed said work and that strikes me as somewhat unethical.

You asked for a loan, the bank gave you most of it, you’re fortunate enough to have the money to make up the difference, you negotiated a lower price, your beef has been aired here and sensible professionals have validated your frustration. Maybe stop there and don’t mess with two appraisers’ livelihood. Enjoy your evening, enjoy living in paradise, enjoy your new home, and move on.

I tried not to judge the appraiser. I don't know the area and I don't know the appraiser's side of the story.
What I have tried to do is give the OP what I go through. What I'm going through now to give OP an appraiser's perspective in what we go through.
OP has his/her opinion and I assume bidded over market price and wanted validation.

 

[throwaway12345]

I noticed agents in a ROV ask me to consider comps outside the neighborhood.
I don't know what comps you have but are they in different neighborhoods? different school districts?

I tried to keep it to the market as defined by the appraiser. So the paired sales I provided were in the same neighborhood, just different product. If market conditions have changed for a substitutable product, I assumed it'd indicate a change in market conditions for my product. I bought a 3 bed 2.5 bath 1,300 SF attached home, paired sales are 3 bed 2.5 bath 1,100-1,200 SF detached homes and a 3 bed 2.5 bath 1,500 SF condo. The older prices (8-10 months ago) fall roughly within +/- 5% of the actual comps used.

Scatter charts I provided were for 3 bed 2 bath & 3 bed 2.5 bath attached homes, detached homes, and condos in the same neighborhood.

All other data provided beyond that was expanded geographically to include the neighborhood and other surrounding neighborhoods.

 

[Fernando]

I tried to keep it to the market as defined by the appraiser. So the paired sales I provided were in the same neighborhood, just different product. If market conditions have changed for a substitutable product, I assumed it'd indicate a change in market conditions for my product. I bought a 3 bed 2.5 bath 1,300 SF attached home, paired sales are 3 bed 2.5 bath 1,100-1,200 SF detached homes and a 3 bed 2.5 bath 1,500 SF condo. The older prices (8-10 months ago) fall roughly within +/- 5% of the actual comps used.

Scatter charts I provided were for 3 bed 2 bath & 3 bed 2.5 bath attached homes, detached homes, and condos in the same neighborhood.

All other data provided beyond that was expanded geographically to include the neighborhood and other surrounding neighborhoods.

As appraisers, we compare similar products.
If subject is an attached SFR home, we don't get detached homes or condos. Is there a reason why you use such different products. Lack of similar attached SFRs sold recently?
Even though we have many sales (note not comps), sometimes I put a lot more weight on one comp especially if it's the most similar but older dated.

 

[throwaway12345]

There are people here giving an opinion of a peer’s work without having reviewed said work and that strikes me as somewhat unethical.

You asked for a loan, the bank gave you most of it, you’re fortunate enough to have the money to make up the difference, you negotiated a lower price, your beef has been aired here and sensible professionals have validated your frustration. Maybe stop there and don’t mess with two appraisers’ livelihood. Enjoy your evening, enjoy living in paradise, enjoy your new home, and move on.

It is not my intent to create an unethical situation or have others opine on my situation in detail without reviewing the work. As you stated, I came here to validate my frustration with the situation and to ask whether I have a right to complain or not in an appraiser's view. Also as you stated, some sensible professionals feel that I may (based on the facts I've presented).

Stopping there and moving on is still definitely on the table. And yes, I was fortunate enough to salvage the deal. Where I hesitate to move on is in the interest of those who (a) aren't fortunate enough to salvage this kind of situation and (b) don't have access to the same resources / data / experience in real estate to question a weak analysis when they see it (if they see it at all) and desk reviewers who may just be mailing it in. Professional standards are important to protect the parties involved, especially with the stakes as high as purchasing a home and especially in a self-policing industry like appraising.

Two points on messing with two appraisers' livelihood, which honestly I would really love to not have to do.

• If your pharmacist gives you the wrong prescription, should you not mess with their livelihood since they gave you happy pills? How would you feel when the next person battling a serious illness gets the wrong prescription?
• If my complaint is illegitimate, it'd be a real pain for the appraisers in question, but their livelihoods shouldn't be affected right?

Believe me when I say that I have tried throughout the process to put myself in a situation where I wouldn't need to file a complaint. I would have loved some kind of closure, whether it works in my favor or not. I have been clear in the data I used to support my questions, and all it would take is to provide some support for why I'm wrong. Instead I have received no rebuttal from the appraiser and the lender has told me this is the end of the line (and I'm not able to ask for a second appraisal). I have asked and asked and presented what I believe are valid questions and have been told to pound sand. That's why I'm here.

 

[throwaway12345]

My eyebrow went up when I read that. Yikes! I understand that in some markets you just can't find anything more recent ... but ... I don't think I've ever based a value on only dated comps (over 6 months). I can't say more without being familiar with the market and seeing what is out there ... of course you are talking about smaller and more limited markets due to the small population of the islands, and location/views are HUGE factors in a place like Hawaii so that shrinks the pool of similar sales further ... you've said you agree with the comp selection so it doesn't sound like he missed using any recent sales, but .... yikes ... to not have a single recent sale on the grid ... I wouldn't want to be in his shoes. As a general matter in a case like this I would personally present a very detailed market analysis if I saw that there might be an issue raised re: appreciation ...

From what I can tell, no recent comps were missed. Duplexes are a fairly unique product, so when you're constrained to the subject neighborhood, sales are going to be infrequent. If you're lucky there will be a recent comp, if you aren't, you're basically stuck with older sales as your starting point.

I don't dispute that this is a tricky assignment. How you adjust those stale sales to present day FMVs is where the art (and detailed market analysis) comes in. Absent that analysis (despite my asks and amateur attempt at doing one myself), it's difficult for me to call the appraisal credible.

 

[throwaway12345]

As appraisers, we compare similar products.
If subject is an attached SFR home, we don't get detached homes or condos. Is there a reason why you use such different products. Lack of similar attached SFRs sold recently?
Even though we have many sales (note not comps), sometimes I put a lot more weight on one comp especially if it's the most similar but older dated.

Exactly. Subject is an attached SFR and the comps are all attached SFRs but sold 8-10 months ago. No attached SFRs have sold in the neighborhood since July 2020.

The only point where I brought in detached SFRs and condos is to show how substitutable product prices have increased across the board in that same 8-10 month period. In the absence of recent attached SFR sales in the neighborhood, I would argue how these prices moved over that time period is indicative of how attached SFR prices moved over that time period. Textbook example for a market conditions adjustment: the same property sold twice in six months, for 8% higher the second time around.