Contract Price Change After Effective Date - Client Wants It In The Contract Section

[Peter LeQuire]

This discussion is - like many discussions in this esteemed forum - one that seems to wander between various sets of requirements (USPAP, banking regs, assignment requirements, etc.). As I read the original post, the question was posed about what was possible, not what was required, I think that FAQ 137 settles the question with an if/then proposition (IF the client wants a new date, MAY an appraiser accommodate that request). Were that request made of me - from a client to which I'd delivered an appraisal - to review a revised contract and change the appraisal to reflect the revision - I'd welcome the opportunity to do the additional service and make a call whether the relationship with the client would support a new fee.

 

[residentialguy]

The CP$ is totally irrelevant as it reflects only the hopes, dreams, goals, and aspirations of ONLY a particular buyer and a particular seller - NOT the competitive market. A purchase price may, or may not be competitive due to specific motivations of parties with vested interests in "doing the deal".

It may or may not be supported by the Competitive Market. Determining same is the primary reason for an INDEPENDENT, and wholly Objective (not subjective) Opinion of Competitive Market Value.

The other is for a Lender to have a compliance document - and an Appraisers' E & O insurance policy to target when the loan defaults because they floated a loan to people who could fog a mirror without adequate financial qualification.

Whether a contract exists, or not is irrelevant to Market Value. Regardless of who the seller, buy, or lender may be - OR the purpose of an appraisal (loan, trust, estate, bankruptcy, divorce etc.) - MV is demonstrated by the Competitive Market - NOT an Active Listing, a Contracted Listing or a Purchase Contract ALL of which are not yet confirmed by the competitivemarket and are mutable prior to closing.

Disagree with the "hopes and dreams" statement. I have hopes & dreams of an island house. But that changes when I sign a legal contract with money down to purchase.
Your comps are no different....they may have had specific motivations of parties with vested interests in "doing the deal". That's why you have to analyse and verify both the subject and comps. Both could be very good indicators of MV

 

[TJSum]

You also could have had your OMV based upon as the single point in your range of equally most probable prices. It would be ballzy to change it, but you could with good reason, stating that the subject was found to the a good indicator of value. But typically the price change is offset by something like seller paids, therefore the OMV would remain the same

What ???

 

[J Grant]

True. But if they negotiated to a different price, there might be reason for a new opinion of MV

?? Why? unless they made changes to the property itself which could affect the value of property for a new opinion.

Typically a change to contract price is because parties negotiate it down when a OMV is lower than SC price. I note the new CS price, make any comments and note my OMV has not changed.

I've appraised property for a OMV higher than the SC price but have never gotten a new, higher SC price in those cases.

 

[residentialguy]

?? Why? unless they made changes to the property itself which could affect the value of property for a new opinion.

Typically a change to contract price is because parties negotiate it down when a OMV is lower than SC price. I note the new CS price, make any comments and note my OMV has not changed.

I've appraised property for a OMV higher than the SC price but have never gotten a new, higher SC price in those cases.

If the subject was a good indicator of value and the price changed. If that was a factor in your opinion of market value, having that change could change your opinion as well....just as if you found out comp 1 actually sold at 350k instead of 360k. You have reasoning to change your opinion. I have never done that, but a change does have a leg to stand on.

 

[J Grant]

If the subject was a good indicator of value and the price changed. If that was a factor in your opinion of market value, having that change could change your opinion as well....just as if you found out comp 1 actually sold at 350k instead of 360k. You have reasoning to change your opinion.

Not for me...can't envision it. I do consider the SC price of subject as a factor, however the other market evidence of sales and listings have to outweigh the individual subject contract, so having the subject Contract price change would not alter the other market evidence.

Finding out a comp sold for different price is not not quite the same thing. The comp did not change price, I made a reporting error in what it sold for.

 

[residentialguy]

For example: The range of $350-365k was equally as probable price. The subject fell within the guidelines of market value and sold at $355k, therefore you used the subject as a good indicator of your point value within that range. You found out later that the subject actually sold at $360k, which is where you would have landed, since the subject was your point determination and was equally as probable, therefore a change to $360k is justified.

 

[CANative]

Great Caesar's Ghost!!

 

[J Grant]

For example: The range of $350-365k was equally as probable price. The subject fell within the guidelines of market value and sold at $355k, therefore you used the subject as a good indicator of your point value within that range. You found out later that the subject actually sold at $360k, which is where you would have landed, since the subject was your point determination and was equally as probable, therefore a change to $360k is justified.

You and I derive point value differently. If my comps adjust to a range of 350-365k, I don't view it as any point along that range is equally probable as another. I see it as my subject property features are closer to the higher or lower priced comps, or my subject was a mid range type property and thus mid range is more probable. Also market conditions such as rising or declining, or stable shape where we opine our OMV. None of which has changed simply because parties decided to change a SC price of subject (for what motivations one might ask)

For example, if subject is most similar to 2 superior comps that sold for the higher prices, why would any point along a range of low to high be as probable as another? If the 2 comps most like the subject sold for 360k and 365k and a range was 350-365k, then a point value between 360k and 365k is the most probable for that subject (unless some other factor is in play such as the higher priced sale comps are older and market is declining, then one might opine lower )

A subject SC price as an idicator can serve as a reason to opine exactly at SC price number, but imo other credible market evidence especially from the comps should support it.

 

[djd09]

appraisers are great dart player, hit the bulls eye. and even when they don't that could be fix with a simple revision.