Fannie's Own Statement About Waiver /value Acceptance;

[J Grant]

Let's assume the worst case scenario; that some contract prices established between buyer and seller are significantly overvalued but the deal goes through anyway because a waiver was used instead of a 1004. That is, a 1004 where the appraiser didn't just hit the number anyway in order to not get blacklisted.

If we know that some waiver transactions are fine and some aren't, how do we sift between the two groups on our way toward developing a supportable adjustment?

Geez George !! The same way we do it for any other transaction. Did the WAIVER notably affect the price, or not? Isn't that the question to ask for a concession or financing in the first place?

Like any other aspect of financing, a WAIVER can affect the price in some cases and not others. I explained that several times in the above posts...

 

[George Hatch]

Cash sales have one commonality with a waiver - in many cases, a cash sale had no appraisal. Sometimes the buyer paid a prevailing price anyway with a cash sale. If they overpaid, the cash affected the price. A WAIVER allows the sale price to be the property value. Did they overpay as a result? The price would tell the story.

"(4) payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto"​

 

[George Hatch]

Geez George !! The same way we do it for any other transaction. Did the WAIVER notably affect the price, or not? Isn't that the question to ask for a concession or financing in the first place?

Like any other aspect of financing, a WAIVER can affect the price in some cases and not others. I explained that several times in the above posts...

Not responsive to the operative question I actually asked:

"If we know that some waiver transactions are fine and some aren't, how do we sift between the two groups on our way toward developing a supportable adjustment?"​

​

Like I said before. I'm all in favor of adding the financing disclosure when it comes to the waivers. If for no other reason that to deprive the critics of the talking point.
I just don't believe appraisers will be able to do anything with that information.

 

[J Grant]

Why would that thought process be any different for waivers?

The growth process might not be different.

If the price of the property is notably high or low, we can adjust for it, or we might not use the comp, or use it and give it little weight. It is helpful to know WHY, if possible.

A WAIVER can easily be identified if they wanted it be so on public records or MLS. An inflated appraisal - how is that identified? An appraisal is confidential to a client.

 

[J Grant]

Not responsive to the operative question I actually asked:

"If we know that some waiver transactions are fine and some aren't, how do we sift between the two groups on our way toward developing a supportable adjustment?"​

We are not sifting between groups (unless that is an appraisal assignment)

We are making an individual adjustment for that specific transaction. That is what we do on the SC grid, correct?

A PDF form of a URAR is available online. The financing is the first line-item adjustment, and like a concession, the question is: did the financing (or cash) affect THIS price of THIS comparable sale?

The support is the effect on price itself. Make all the other adjustments, then go back and look at the grid. If one sale sticks out, maybe the financing or cash or concession affected the price. Adjust for that and see if it lines up as the adjustments price more closely to the other comps.

Again, a cash sale or concession (or other) can affect a price on one sale and not others. Regardless of what a grouped pattern shows.

 

[J Grant]

*Adjustments to the comparables must be made for special or creative financing or sales concessions. No adjustments are necessary for those costs which are normally paid by sellers as a result of tradition or law in a market area; these costs are readily identifiable since the seller pays these costs in virtually all sales transactions. Special or creative financing adjustments can be made to the comparable property by comparisons to financing terms offered by a third party institutional lender that is not already involved in the property or transaction. Any adjustment should not be calculated on a mechanical dollar for dollar cost of the financing or concession but the dollar amount of any adjustment should approximate the market’s reaction to the financing or concessions based on the appraiser’s judgment."

Above from the URAR form

 

[alebrewer]

The wonderful thing about this country is that folks are free to be as obtuse, or as knowledgeable, as they desire. My recommendation to all the folks that believe waiver = overvaluation: Fight like hell to get that info into the MLS, then use that data to create reports on a credibility level not previously attainable without said info.

 

[TerryRohrer]

...a cash sale or concession (or other) can affect a price on one sale and not others. Regardless of what a grouped pattern shows.

Exactly why I am not a proponent of disclosing transactions involving a waiver. Some will simply make up an adjustment to narrow the spread of their comps without thought or analysis.

 

[George Hatch]

The unspoken presumption seems to be that one of the motivations for seeking or granting a waiver is to clear a transaction that is overpriced. To make a deal that an appraiser would not rubber stamp.

That suspicion being presumed on an evidence-free basis.

 

[timd354]

Geez George !! The same way we do it for any other transaction. Did the WAIVER notably affect the price, or not? Isn't that the question to ask for a concession or financing in the first place?

Like any other aspect of financing, a WAIVER can affect the price in some cases and not others. I explained that several times in the above posts...

Your argument is beyond silly. When a buyer writes a purchase offer and a seller ratifies a contract, neither the buyer nor the seller have any way to know whether an appraisal waiver is going to be offered or executed upon, so the waiver certainly did not affect the price that the buyer was willing to pay or the price the seller was willing to accept, In any case, an appraisal waiver in no way could be considered to be considered "special or creative financing or sales concessions" that affected the sale price. A Fannie or Freddie Mortgage is just a normal, conventional mortgage that is typical of how most homes purchases are financed. An appraisal or an appraisal waiver is nothing more than an underwriting/valuation tool that is used by the lender (for the lender's benefit) when determining whether or not to approve the mortgage - no matter which underwriting/valuation tool is used by the lender during their underwriting process, the terms of the mortgage loan made to the borrower remain exactly the same, so it is ludicrous to argue that somehow the use of the appraisal waiver by the lender somehow amounts to "special or creative" financing that affected the sale price.