Fannie definition of market value

[glenn walker]

A filed

Not true for a field review appraisal. The review asks agree or disagree with the OMV, it does not ask agree or disagree with the CS price. Ido concur that fir origination client, an appraisal may pass a computer or quick scan review that is not too focused. But an appraisal coming in at SC price is not a safe harbor -

There is some risk for number hitters being placed on a lender do not use list or a Fannie watch list or earn a board complaint. But those ramifications usually come years later, and may never come at all-, thus making it, as we note, a low risk (sorta ) . What usually keeps appraisers on the right side of the line is their ethical standard for themselves or perhaps how they were trained .

Problem with current system is appraisers are kind of caught.... they can get punished on front end by clients who stop sending work for too many "low" appraisals, or back end down the road if they inflated value. A choice between are you in it for the Short term or long term....

Field Reviews are a different animal and rarely used accept when the initial desk review finds numerous issues and or when the reviewer has detected enough issues to warrant it. The field review is also an-unspoken heads up to the reviewer that value is being questioned. I have never known an-appraiser to be punished for high valuations unless there was suspected fraud involved. BUT I have known lot of appraisers who ended up out of business because they brought one-too many in low.

 

[J Grant]

A filed

Field Reviews are a different animal and rarely used accept when the initial desk review finds numerous issues and or when the reviewer has detected enough issues to warrant it. The field review is also an-unspoken heads up to the reviewer that value is being questioned. I have never known an-appraiser to be punished for high valuations unless there was suspected fraud involved. BUT I have known lot of appraisers who ended up out of business because they brought one-too many in low.

Idk about that... the "punishment " is often the form of beng placed on a lender or wholesaler or FHA do not use list or Fannie watch list, either of which is pretty much a death knell - few appraisers are going to talk about it, but we we have seen posts asking how to get reinstated... good luck with that...

Appraisers who voluntary turn in a license rather then get it taken by the state add them in too.

But consequences can seem arbitrary- some slick number hitters practice for years or an entire career - imo what keeps an appraiser on the right side of the line probably more due to an intrinsic ethic ( or just pee in pants fear of a board ) and/or how they were trained...being on the right side has its rewards ..review work when things get slow or approval list of a better set of clients.

 

[glenn walker]

Idk about that... the "punishment " is often the form of beng placed on a lender or wholesaler or FHA do not use list or Fannie watch list, either of which is pretty much a death knell - few appraisers are going to takl about it but we seen here some posts asking how to get reinstated... good luck with that...

Appraisers who voluntary turn in license rather then get it taken by the state add them in too.

But it can seem arbitrary- some slick number hitters practice for years or an entire career - imo what keeps appraiser on right side of the line probably more due to intrinsic ethics ( or pee in pants fear of a board ) or how they were trained...being on the right side has its rewards ..review work when things get slow or approval list of a better set of clients.

A slick numbers hitter is different than a Skippy. The Skippy-is typically fast and sloppy and is weeded out in a fairly short amount of time because its his sloppiness and errors in totality that get him on a review desk and after 10 or 20 of them he is relegated to the do not use list. Its also rare to do a Field Review on a Skippy because he makes it easy for the reviewers to know his value is probably off BUT on purchases his value will be the Sales Price which most often is close to it's real value. A Skippy's definition of market value is the sales price and he does not spend one minute thinking about Market Value . The TRUE Professional value inflator are guys-gals who are often very good at creating reports that on the surface look so good the reviewer finds no errors, and it's well put together and on the surface it looks great so it gets signed off on.

 

[Overimprovement]

OI,
Why did you omit the 'concession' condition in the definition?

Because I did not feel it germane to the discussion I was hoping for. Most sales in my market have no concessions. Excessive or even above normal concessions is not what seems to be driving this frenzy. So I felt it was a variable that could be excluded for now.

 

[glenn walker]

In SO CA I have seen no concessions in the last 12 months in fact its just the opposite most are paying way over list price .

 

[Overimprovement]

Actually,

in areas with lockdowns,
during the lockdowns,

The point could absolutely be made that the market was not "open", therefore the "competition" was not "typical"


.

This was certainly true for parts of last year--do you (or anyone) think this is still having any lingering effects?

 

[glenn walker]

This was certainly true for parts of last year--do you (or anyone) think this is still having any lingering effects?

In SO CA absolutely-Our Spring Pop -Started in winter when Realtors were finally letting people look at houses although many have been sold sight UN-seen - Covoid-19 restrictions have changed peoples behavior where and where I live -it's like they are on speed and they have to be doing something and if its -not over-bidding on houses its racing down residential streets at 70 MPH-its kind like Mad-Max movie no rules anymore. As a Sociology Major I have never seen so many people in mass acting so different in less than 12 months. I almost wonder if the disease not only had physical effects but metal ones to. As far as when this ends ? -who knows but at least in SO CA I think by next year we may be seeing a giant car crash. Out here this is certainly not sustainable and YES its different this time way different. I am a 1/2 mile from the fire department and its 24/7 sounds of trucks and ambulances running up and down the streets and I don't think I could sleep anymore with out hearing them. The best free entertainment is watching the daily car chases on TV with 8 troopers chasing a car jacker at 100 MPH -This weekend was quite looks like half or more left town and free ways to Las Vegas-on Friday was backed up hundreds of miles. Hey Ethel-The inmates took over the prison and now they broke out and are on their way to Vegas with their overstimulates checks.

 

[Overimprovement]

Glenn might be onto something. I swear I have seen a lot more rage lately in my local, otherwise low key area. Keep reading more instances of what I call rage around the country as well. I thought seeing Trump out of office would cool off the vitriol and anger in this country, but frankly things seem worse today than ever. My wife has actually been almost run off the road twice in the last 3 months. Never before happened in her life. Discussing this is best left to a new thread, if anyone wants to create one. Back to topic--

Couple ways of approaching this current market that are interesting to consider:

1) If a languishing small town got word tomorrow that an Amazon fulfillment center was being built, obviously that would drive demand far ahead of likely available supply, leading to an imbalance and price increases. Certainly we would expect prices to go up, but on an appraisal by appraisal basis there would not be comps to support it until equilibrium was reached. Conversely, if one large employer in said small town announced their entire plant would close in 30 days, we would expect the exact opposite--supply to likely far outstrip demand, with decreasing prices, and again, no comps available to support the lower prices until some equilibrium was reached.

2) What if, as many continue to think would be best, myself included, no contract or list price was available to the appraiser. There would then be no anchor, and as Glenn points out, many appraisers could have a harder time concluding a reasonable market value. In this scenario, appraised values would possibly continue to lag behind actual current market activity. One could ask--is this a good outcome? Telling most of the market--you are wrong, what you SHOULD be paying is this? Do we create the market, or merely report it?

We (well at least I am) currently are seeing quite a large supply/demand imbalance, like a huge factory paying $40/hr minimum is being built in every town and village. Does this imbalance alone cause part of the definition of market value to fail, or do all the elements still fit?

 

[Meandering]

This was certainly true for parts of last year--do you (or anyone) think this is still having any lingering effects?

Depends on the "comps" used in the analysis. Some areas still have lockdowns, or partial lockdowns. And as obvious on this forum, many people are still in panic mode over the virus, so they won't go out to buy or sell.

But, historically low interest rates, enhanced credit positive scores and lower down payments are "favorable" financing that impacts the chart of historical sales. It is good to do an analysis of the median/average home sale GLA and and age over several years, to understand if the low end is participating or if they are being run out of town, and the enhancements to credit is a sales pitch that isn't playing out.

This is not a market that moved up in value because everyone is prosperous, look for more deed transfers to corps, LLCs and trusts, then what you've previously seen in the market as the wanna be's are thinking they can AirBnB properties and be profitable against low interest rates. Also, keep up with the forbearance numbers. There is still some time left for people to apply for forbearance.

A good website to use to keep up with the changes in the national mortgaging facts is:

Mortgage Application Volume Struggles to Keep up With Hot Housing Market

Mortgage application volume lost ground again last week, although the decline was small and refinancing volume pulled out a sliver of a gain. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, decreased 0.9 percent on a...

www.mortgagenewsdaily.com

I find it interesting that the local investors here I spoke with, have pulled their rentals off the market and holding them vacant, but won't tell me why, although I suspect it had to do with the eviction moratoriums, but to have vacant properties and keep buying more vacant properties, well, if they expecting rents to increase....that will be hard to do with no new high paying employment coming to most areas.


.

 

[Alsie35]

This bubble is worse than 05-07. I've talked to a few sellers who are cashing out and renting for a year or 2. Waiting for the crash. Maybe buy their old home back and half the price.

Just tell 'em to move up to New York, Pennsylvania or New Jersey. Heard there's a lot of bargains to be had up there.