correcting/revising a quality rating for comp

[robertwells]

Hi Guys and Gals,

I wanted to get some opinions here...I am using a comp for a second time in an appraisal, and upon further review/consideration, a Q3 rating is more appropriate than the original Q4 I assigned it. My subject in the current assignment is Q3 so there is no need for adjustment...my question is, should I keep the original Q4 rating, enter a 0 in the grid and explain no need for adj. and the rating is kept at Q4 for consistency basis, only (to keep Fannie happy), or revise to Q3 and explain in addendum? I don't know about you guys, but these mid-level ratings (Q3/Q4 or C3/C4) tend to be the most arbitrary/vague...Thanks for any input...Bob

 

[smackodu]

Hi Guys and Gals,

I wanted to get some opinions here...I am using a comp for a second time in an appraisal, and upon further review/consideration, a Q3 rating is more appropriate than the original Q4 I assigned it. My subject in the current assignment is Q3 so there is no need for adjustment...my question is, should I keep the original Q4 rating, enter a 0 in the grid and explain no need for adj. and the rating is kept at Q4 for consistency basis, only (to keep Fannie happy), or revise to Q3 and explain in addendum? I don't know about you guys, but these mid-level ratings (Q3/Q4 or C3/C4) tend to be the most arbitrary/vague...Thanks for any input...Bob

Only 4 appraisers got the kiss of death from Fannie so everyone else must be doing a great job. Make it a Q3 and don't explain anything to your current client. You have more information now about this comparable sale that you did not have before. Move on.

 

[hastalavista]

This is a great question; especially since the GSEs in their wisdom (said with sarcasm) are using variations of quality and/or condition (Q/C) ratings among sales that are used by the same appraiser.
I get the fact that the UAD rating is supposed to be objective and shouldn't change.
I better get the reality that when a property is on the margin (borderline), it is not only reasonable but should be expected that there will be a variation in the rating from time to time.

The real problem here (IMO) is how does the appraiser communicate that a reevaluation of the comparable has resulted in a change of the quality/condition rating from how it was rated in a prior assignment (which should have nothing to do with the current assignment, but could be very important if multiple reports are caught up in a GSE dragnet) without causing the current client/intended user to wonder what else has or should be reevaluated?

I think if you learned something new about the sale (maybe talked to the agent this time around if they weren't available the last time), then you are in a "no harm/no foul" situation of explaining that in a prior assignment you had a different rating, and for this assignment it is X because of additional information available now that wasn't available then (that sounds like good due diligence research to me).

If you didn't learn anything new and the change is more due to an evolution of your analysis process (which happens and is probably a good thing), then how to best communicate that is a tough one.

Unfortunately, I don't have a quick answer for you. I'll be interested to hear what others think or would advise in this situation.

However you decide to handle it, good luck!

 

[Blueprint]

upon further review/consideration, a Q3 rating is more appropriate than the original Q4 I assigned it.

If you have data to verify why Q3 is now more appropriate than Q4 in the prior appraisal, then you have nothing to be concerned of. If Q3 just happens to work better for this appraisal, it's a crapshoot. There is a lot of known/unknown career gambling going on in the mortgage appraisal industry right now with these new strict regulations.

 

[HF Mudd]

I would not change the Q rating on a comparable unless I had new information not available to me in the prior appraisal. If no adjustment is warranted between Q3 and Q4 in the current appraisal, I would utilize a 0 in the grid and explain. To do otherwise would to invite unwarranted scrutiny by Big Brother FNMA - a road not to be travelled unless necessary.

 

[J Grant]

I am with Mudd on this one. though Denis made an excellent post. Sadly, this draconian position by Fannie about turning the scrutiny on appraisers who change condition ratings on same comps between reports led us here. I doubt they put an appraiser on bad list for one variation, they are probably looking for a pattern. Still, why open the door further, since we all likely are going to have some rating discrepancies we don't realize are there.

So I would keep C4, explain that it is close to C 3 and in the price there is no measurable market reaction ( if that is true, ) and therefore no adjustment, or make a token $1000 adjustment for condition too minor to affect value. That is the defensive crappy position they have put is in.

 

[TxArmadillo]

The real problem here (IMO) is how does the appraiser communicate that a reevaluation of the comparable has resulted in a change of the quality/condition rating from how it was rated in a prior assignment (which should have nothing to do with the current assignment, but could be very important if multiple reports are caught up in a GSE dragnet) without causing the current client/intended user to wonder what else has or should be reevaluated?

Denis, this is the heart of the matter and at the center of a very active thread on this Forum several months ago when the GSE announced they were tracking the Q/C ratings.

It's kind of like case law -- we really don't know how the rules will be interpreted and enforced until a couple of appraisers get called onto the carpet to explain what they did (changed a Q or C rating) and why they did it.

 

[residentialguy]

I don't remember what I use in my prior reports and I'm sure it has varied once in a while. There is no B&W line. I put this in all my reports. I suggest you put it in yours.

UAD REPORTING RATING VARIANCES BETWEEN MULTIPLE REPORTS
The property characteristics for a comparable property is described and rated as they existed at their time of sale and the appraiser stays consistent
as much as possible. However, often a property falls on the dividing line between the higher rating and the following lower rating, with each being
similarly applicable. Should that occur, the rating that gives the least confusion will be used in each report. Therefore, what may be the upper
rating in one report may show as the lower rating if used in another report. Or additional information was found that warranted a different rating.
While this rating variance may show up when monitoring across multiple appraisal reports, it is essential that appraisers develop and communicate
their analyses, opinions, and conclusions in a manner that is the most meaningful, logical and not misleading within each report.

 

[robertwells]

Thanks All, for the input...My sense is, with more data from agent, further consideration, scrutiny, and revision to what I deem now to be a more appropriate quality rating would seem to make the most sense, but just narrarate the reasons for the change. However, a part of me wants to play the game strictly by the rules and just leave the rating at Q4, explaining even though I have newer data/reconsidered or even corrected opinion, I have left the rating at Q4 SOLELY to adhere to UAD guidelines. Just enter a 0 and note no adjustment necessary due to updated info. and revised-corrected opinion...Im thinking that may be the way to go to play by their rules, strictly...

 

[robertwells]

I don't remember what I use in my prior reports and I'm sure it has varied once in a while. There is no B&W line. I put this in all my reports. I suggest you put it in yours.

UAD REPORTING RATING VARIANCES BETWEEN MULTIPLE REPORTS
The property characteristics for a comparable property is described and rated as they existed at their time of sale and the appraiser stays consistent
as much as possible. However, often a property falls on the dividing line between the higher rating and the following lower rating, with each being
similarly applicable. Should that occur, the rating that gives the least confusion will be used in each report. Therefore, what may be the upper
rating in one report may show as the lower rating if used in another report. Or additional information was found that warranted a different rating.
While this rating variance may show up when monitoring across multiple appraisal reports, it is essential that appraisers develop and communicate
their analyses, opinions, and conclusions in a manner that is the most meaningful, logical and not misleading within each report.

I like it...!!!