Data Cancer found....

[J Grant]

#sowhat

You never did answer the question I asked earlier: If you identify a high sale that was funded without an appraisal, what then? How does it affect your valuation? If/when identified, what can you do with that information besides complain about it?

If all your comps are pointing to a $400k value conclusion but you think they were skewed by a couple of waivers then what do you do? Say in your report that the $400k they are indicating to isn't the MV?

Of course you won't. You can't. Those sales went off at those prices whether you think they are reasonable or not. That's what makes the entire "Data Cancer" theme completely ridiculous - none of the people pimping this theme have thought it all the way through.

The obvious parallel is the ARM-driven pricing 20 years ago. The financing was ridiculous in terms of safe/sound but they were also so common as to not fit the definition of atypical or creative as that assumption is laid out in the definition of MV. So there's no adjustment to be made by the appraisers. The price paid between buyer and seller was the price. That's what has been happening all along with the waivers as well as all the other lot LTV and all-cash sales. The price is the price whether you agree with it or not.

WRT the first part of your post,I will answer your question, but before I do ,a reminder that WAIVER disclosure is not just about a few appraisers! Nobody else can run stats to see if the WAIVERS are affecting prices. You never address that aspect.

But to answer your question - A) - if a sale was high (or very low ), whether or not it was funded with a loan using an appraisal, chances are I will not include it as a comp or put little weight on it.

It is often not feasible or possible to know if a WAIVER was used, I bet the RE agents don't even know- but assuming we can find out, just as with A) example, if it influenced the value, to the degree the comp is atypical or an outlier or just very high or very low, I might not use it as a comp or use it and put less weight on it.

Comps can range lower to higher in price sometimes without a clear reason; however, when financing or concession or X is seen to have impacted the price enough to matter, then we have choices -not use it for a comp, or use it and adjust for how much X or a concession affected price, or use it with no adjustment and put less weight on it.

 

[J Grant]

#sowhat

Neither you nor anyone else ever did answer the question I asked earlier: If you identify a high sale that was funded without an appraisal, what then? How does it affect your valuation? If/when identified, what can you do with that information besides complain about it?

If all your comps are pointing to a $400k value conclusion but you think they were skewed by a couple of waivers then what do you do? Say in your report that the $400k they are indicating to isn't the MV?

Of course you won't. You can't. Those sales went off at those prices whether you think they are reasonable or not. That's what makes the entire "Data Cancer" theme completely ridiculous - none of the people pimping this theme have thought it all the way through.

The obvious parallel is the ARM-driven pricing 20 years ago. The financing was ridiculous in terms of safe/sound but they were also so common as to not fit the definition of atypical or creative as that assumption is laid out in the definition of MV. So there's no adjustment to be made by the appraisers. The price paid between buyer and seller was the price. That's what has been happening all along with the waivers as well as all the other low LTV and all-cash sales. The price is the price whether you agree with it or not.

The second part of your post - you are making the case above not in favor of having WAIVERS disclosed (at least that is how it reads ) , which is fine, but you got all bent out of shape last time when i pointed that out and accused me of lying and, called me a LIAR. But what else is the above argument then ? You keep confining your argument to appraisers, we are the least of the reasons it needs disclosure.

Comparing the WAIVER program to ARMs is different - both stink for different reasons, and one wrong does not excuse the other wrong. You as well as I signed the appraiser petition back in the day , we knew prices were out of control but the GSE's ignored us.

They are ignoring us again. All we are asking for, or at least I am asking for, is to disclose WAIVER so people can run statistics on them, be they investors, RE agents, appraisers, or analysts.

Imo, WAIVERS are not the same kind of stimulus that ARMS and other other financing back in the day was. WAIVERS act as a slow drip effect on the market - if prices are inflated on some of the purchase transactions, it is more like this one closed 2% higher, next month another closed 3%, next month no waiver loans closed, next month one closed on the high side, etc. And that can add, by the end of the year a substantial percentage ot the prices - because each high sale forms the top of the range for the next AVM or appraisal.

The same is true of low as well, but buying low and getting a great deal usually benefits buyers, and they are not overleveraging their financing .

It will be interesting to see how it plays out with the new, more risky expansion to 90% LTV and 97% LTV in 2025.

 

[Dublin ohio]

I bet the RE agents don't even know-

It wouldn't be hard for an agent to at least strongly suspect that a waiver was used. How many agents that you know don't keep track of showings and/or appraisal and home inspection appointments. A few questions is all it would take to find out. Zoe keeps on reminding us that the NAR doesn't "like" waivers. Maybe they could advise their members to make an effort to find out and include that info in their listings.

 

[George Hatch]

Uhhh, why are you making me repeat the obvious?

Using a waiver instead of an appraisal is not a financing concession, nor is it an example of creative financing because the terms of the financing (rates and amtz) are not being changed. No dollars are being added or subtracted to any aspect of the transaction or the financing.

Bank A makes a 6%/30amtz loan off a waiver​

Bank B makes a 6%/30amtz loan off an appraisal​

The loan is the same. The payment is the same. No dollars are being added nor subtracted from the sales transaction or the financing.

Nothing at all is happening between the buyer and seller, nor is anything happening with the brokers. So you can't even call those transactions out as not being arms-length.

 

[George Hatch]

The second part of your post - you are making the case above not in favor of having WAIVERS disclosed (at least that is how it reads ) , which is fine, but you got all bent out of shape last time when i pointed that out and accused me of lying and, called me a LIAR. But what else is the above argument then ? You keep confining your argument to appraisers, we are the least of the reasons it needs disclosure.

That's still a lie. I am not making any case for non-disclosure. Not on this issue nor on any other appraisal-related issue. Please stop lying.

All I'm doing is asking a completely legitimate question: even when disclosed what can you do with the information?

Two things can be true at the same time. On the one hand I can agree with you that more transparency is always better, and on the other hand I can also understand that nothing will come of this particular disclosure.

 

[J Grant]

That's still a lie. I am not making any case for non-disclosure. Please stop lying.

All I'm doing is asking a completely legitimate question: even when disclosed what can you do with the information?

I am not lying, and I would appreciate it if you did not accuse me of that.

I am stating to you how your posts are perceived, at least by me --since you just wrote one which, in essence, discredits that disclosing a waiver would make a difference, and ignoring the impact it makes on statistics and insist on addressing it as an appraisal problem. I don't see it as much of an appraisal problem. It is more about a market price problem.

Appraisers do become affected, though, as we have to use the comps that exist completely in an inflated price market, is more precarious. More defaults might occur at some point, and only the appraisers will be looked at, not the loan officer who estimated a value for a WAIVER.

It

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[George Hatch]

Whether it's incompetency or deception on your part the effect remains - I am not advocating against disclosure. I haven't said one word about thinking more disclosure is unnecessary or counterproductive or undesirable in any way. No resistance whatsoever. Stop saying that I am.

Nor am I ignoring the possibility that waivers can be of effect on the prevailing pricing trends in the market. You should stop believing that untruth, too.

I would like to take the opportunity to remind you that in our day job, "problem identification" comes first. Prior to coming to any conclusions we should at least look at the data to see what there is to see.

The moral judgment is supposed to come AFTER the analysis, not in lieu of it.

 

[J Grant]

The problem with WAIVERS is that they can be used by parties for price manipulation. I already see more LLC and RE agents as both sellers and buyers, purchasing at IMO inflated prices. And with it, more properties showing delinquent taxes.

We have been concentrating on the high end, but what if, for example, a group of investors, perhaps with complicit agents, target and area and want to drive prices down so they can pick up proepties at bargain prices. These people are savvy investors and flippers and agents - they can run an AVM and get an idea of the low end or a high end and then draw up a sale contract at a very high or very low price, and that price gets approved for a waiver. An Appraiser might have appraised it below or above the SC price (I have done both).

It will close at the lower price even if it appraises higher, but these can be deliberately low-price deals done as part of rings to buy low and have the seller walk as a strategic default for the balance and /or to drive prices up or down in an area. at least with an appraisal, there is a record that the valuation was the property worth more or less than the SC price.

This is just an example. I am sure there are schemes I can not think of. The program is young - the predators latch on and especially with it expanding to the low down LTV ratio.h prices,

 

[George Hatch]

• Buyers buy
• Sellers sell

The sales contract represents the meeting of the minds. So long as these contracts go down at arms length between buyer and seller the price actually being paid by the buyer is the price.

When the lenders engage in riskier underwriting that's a financing issue, same as when they engage in safer underwriting. A financing issue; not an appraisal issue. If the borrowers can figure out a way to cheat the lenders as a result of a lender-provided loophole then that's a problem that only the lenders can solve for.

Appraisers appraise the one property per the definition of MV. It is not our job to suppress the prevailing prices being paid by the buyers or to remediate the prevailing prices being sold by the sellers. If you want to regulate the underwriting protocols the lenders are allowed to use then go get a job with one of the regulatory agencies and stay out of appraising because the two roles are mutually exclusive. The regulators don't appraise and the appraisers don't regulate.

 

[Terrel L. Shields]

Bank A makes a 6%/30amtz loan off a waiver

how the F do they know it is a market value sale if they are lending 97%? I mean what benchmark gives them the value? This is like lending 1975 when you vetted the borrower without a serious clue as to the value of the collateral.