Data Cancer found....

[Zoe]

That is also why many agents will encourage a seller to let them list the property higher than what the agent thinks it well sell for and if the seller gets anxious, the listing agent will quickly tell the seller we need to lower the asking price. The agent till tell the seller this is the feedback I have received from potential buyers or the buyer's agents or someone else.

The listing agent does not want to lose that sale within the contract they signed with the seller. They don't care about market value. The listing agent wants it to sell while it is their contract with the seller.

Many agents encourage the seller to order an appraisal before they list the subject property for the seller.

 

[George Hatch]

Well! That was certainly a fun 24 hours! Such passion in this thread!

Mr. Hatch.... I would respectfully request that you wait until I release the final report on my "Data Cancer" analysis. It will be out in January.
Please review and then feel free to crucify me at will.

Since you were able to find my home, my backyard, and my deer, I'm sure it would have been easy for you to locate my email and phone number as well. I think a true professional would have reached out privately to ask questions instead of obnoxiously thrashing me on this forum.

We may have had a nice constructive conversation. I may have invited you to visit my beloved Cincinnati and had you over for dinner at my home. I could have served you a steaming plate of smoked venison with some fava beans and a nice Chianti. But... sadly that didn't happen.... and that's my loss.

I do appreciate you spending nearly 24 hours on this topic. I would estimate a certified general appraiser in Carlsbad probably commands a billing rate of $400.00 per hour, so I figured you spent $9600.00 worth of energy and professional time on.... well... me.

I'm honored but I'm not going to pay that invoice. I recommend sending it to the GSE's. They'll pay it. Don't forget to include a copy of your W-9.

To everyone else... This is my first post on A.F. and I want to say thank you for listening to the show for the past ten years!
Kevin and I will continue advocating for the appraisal profession and we have a great line up scheduled for 2025!

We truly appreciate you listenership!
Happy Holidays!

Phil Crawford / VOA

I commented on what I saw. What you posted. What you're telling appraisers and what you are asking them to believe. If you retained more relevant information in reserve that you didn't share then that isn't my fault. If you had shown more I would have been able to consider more.

I don't know what that view is worth. We have a couple datapoints (in freaking Zillow) that anyone could find which imply it is significant. From there it took me ~10 minutes to identify the County and find the County's records on the property including the subject's prior sale at $350k, and that's only because I have no experience appraising in your region or exactly where to look to find this info. I'm 100% positive that you have access to more relevant info that could add to the discussion. If you think I did too much then take solace that if i was local I would have gone a lot deeper than this.

I am not refuting your talking point about data cancer or price creep. I've been watching a large percentage of appraisers rubber stamping contract prices over the last 35+ years to know that the largest source of any price creep or data cancer has been appraisers. I assume AVM-backed waivers will add to that problem but I don't presume to pretend that the GSE waiver program created the existing data cancer problem all by itself. In the future you might consider acknowledging the same.

As I've said repeatedly, I just don't think this particular example is a great one to use to support this theme due to the wrinkles involved. Normally when we look for paired sales or group comparisons we choose examples which don't include significant other variables besides the one we are attempting to isolate.

You seem to think I spent too much time picking over this situation, but IRL I've been doing the same on this forum for many years on many other examples. So you shouldn't consider this example to represent some special amount of attention or effort on my part. I do this on a regular basis when the various appraisal controversies come up. I mean, other than the foolishment of approaching your comparisons of such a wide difference in GLA using a price/sf mode of analysis - TBH I've never seen a professional appraiser attempt to do that when talking to other appraisers.

And lastly, I took me less than 5 minutes to find this transaction and most of the rest of your dataset in Zillow, which means anyone else could have done the same if they had made the effort. It took me another 60 seconds of looking at that map to see that there might be a reason for the higher price that wasn't in any way related to the waiver issue. TBH I spent way more time going through your video to see if perhaps I missed something from what you were saying. I was trying to give you the benefit of thr doubt. I'm generally optimistic about appraisers that way.

As to how this neighborhood relates to your personal interests, if any, that's your own fault for picking an example that's so close to home. It isn't my fault that you apparently assumed nobody would want to take a closer look at these sales.

If you want to add content to this discussion then I think that's great. But you might want to keep in mind that this is a roomful of appraisers, not a roomful of broker chix.

In God We Trust, all others bring data. ​

 

[Zoe]

Even on a cash sale, the seller or buyer or both could have ordered an independent appraiser on their own.

 

[George Hatch]

This buyer backed their opinion of the value with $130k of their own money.

 

[alebrewer]

What is market value?

Market value is generally defined as the most probable price a property should bring in a competitive and open marketplace, as of a specified date, in cash or its equivalent. This requires an arm’s length transaction, where both parties act in their own best interests, without undue haste or duress. Additionally, it requires that both buyer and seller are reasonably informed about the property and the market, and that the property has been exposed to the market for a reasonable period of time.

So, if a buyer makes a full price offer after 5 DOM and the seller accepts right away. Is that a reasonable period of time to be exposed to the market? What if the buyer is not reasonably informed?

Now the lender just waives the sucker due to the borrower making a large down payment. Where's the safety net? Who's protecting the consumer?

Especially if the purchase was at a price higher than the most recent, competitive sales. Who's to say that it's at fair market value? Collateral underwriter? Zillow?

The Realtor's happy, they made a fat commission check. The lender's happy, no speed bump appraiser telling them their deal's going to fall through.

What happens to the buyer when they go to refinance when rates are more favorable and find out their property is not worth what they paid for it a few months down the line?

Now the sale is injected into the market and others (appraisers, Realtors) are relying on it. This was the whole premise of the voice of the appraiser podcast. Did the host leave out some important details as George is contending? Maybe. Was the dude a little over the top and animated. Sure... but it's not a hard stretch to think that this couldn't be happening.

You in disagreement with me are thinking in the traditional, classic, real estate sense. A waiver is "not" typical.

I mean, theoretically, any outlier transaction could be classified as 'non arm's length' insofar as (again - theoretically speaking) if someone overpays for a property, it can be assumed they were either: (1) not well informed, or (2) not acting in their best interest. The flip could be argued as well - if a seller sells under market, then they're either not well informed, or not acting in their best interest...

 

[George Hatch]

With SFRs the other possibility besides well informed/advised is that the buyer might just want what they want. Unlike multi-family or most of the non-residential property types, SFRs meet certain emotional needs of these buyers in addition to their utilitarian needs. So if the home is decorated well and the buyer likes the public zone of the house on the left and the private zone on the right and the house is oriented to get more daylight sun through the kitchen window in the winter these are factors a buyer might not even be able to articulate. But which can affect their selection of this property vs the one across the street.

Nobody wraps a lot of their personal identity in the 5000sf warehouse they own or the 3ac SFR lot they own. You can't pull companionship at the club by telling them you own a laundromat or a car wash.

 

[Zoe]

With SFRs the other possibility besides well informed/advised is that the buyer might just want what they want. Unlike multi-family or most of the non-residential property types, SFRs meet certain emotional needs of these buyers in addition to their utilitarian needs. So if the home is decorated well and the buyer likes the public zone of the house on the left and the private zone on the right and the house is oriented to get more daylight sun through the kitchen window in the winter these are factors a buyer might not even be able to articulate. But which can affect their selection of this property vs the one across the street.

Nobody wraps a lot of their personal identity in the 5000sf warehouse they own or the 3ac SFR lot they own. You can't pull companionship at the club by telling them you own a laundromat or a car wash.

I don't think that is the point being made. I think the point is how far off an appraisal waiver could be relative to Market value opinion by an Independent fee appraiser.

I have asked that question before. Who sets that value? What is the definition of the Value?

 

[J Grant]

That's what I was saying....a waiver should be notated in the MLS. When analyzing the data, it could be scrubbed or investigated further.

And there it is.... the lenders are not loaning their own money. Why would they have the need for an appraisal?

Mejappz started a thread where NAR is up in arms about waivers. It appears that they got wind that they'd be left holding the bag under their fiduciary responsibilities to their clients.

?? WAIVERS in loans has nothing to do with the agents and NAR and they certainly don't have any liability wrt holding any bag for it -

 

[Zoe]

?? WAIVERS in loans has nothing to do with the agents and NAR and they certainly don't have any liability wrt holding any bag for it -

Right. They are legally biased like gses and loan officers etc.

 

[J Grant]

With SFRs the other possibility besides well informed/advised is that the buyer might just want what they want. Unlike multi-family or most of the non-residential property types, SFRs meet certain emotional needs of these buyers in addition to their utilitarian needs. So if the home is decorated well and the buyer likes the public zone of the house on the left and the private zone on the right and the house is oriented to get more daylight sun through the kitchen window in the winter these are factors a buyer might not even be able to articulate. But which can affect their selection of this property vs the one across the street.

Nobody wraps a lot of their personal identity in the 5000sf warehouse they own or the 3ac SFR lot they own. You can't pull companionship at the club by telling them you own a laundromat or a car wash.

Hey, the buyer could like what they like and pay any crazy price to get what they want.

But that individual buyer is not the same "model" typically motivated buyer in the MV definition, . It s the hypothetical buyer and seller in the MV definition who appraiser use for the assumed effective date of appraisal "transaction" for the MV opinion.

It seems easy for an appraiser to forget that there are two prices in a purchase price appraisal - the actual sale price between Mr. Smith, buyer, and MR Jonese, seller, and the market value opinion expressed as a price in the appraisal - which may be the same as, or higher than, or lower than the CS price

A WAIVER in a purchase will s have the value be the same as the SC price ( as long as it fits with the FF AVM range- who the heck ever sees it btw?)