Final Opinion Matching Sales Approach

[Lee Lansford]

What I mean by matching is that the Box/Blank for the Sales Comparison Approach match exactly the Box/Blank for the Final Opinion of Value.

IF the two differ by only a few dollars, aren't you making a needless headache for yourself?

 

[timd354]

341249513=95=13

 

[timd354]

I think the OP is having a problem with the following type of scenario:

Indicated value by Sales Comparison Approach: $250,000
Cost Approach: $245,000
Income Approach: $247,500

Appraiser's Opinion of Value: $250,000

I think that the OP believes that the appriaser's opinion of value should not exactly match the indicated value by the Sales Comparsion Approach in a residential appraisal and seems like underwriters are having a problem with her appraisal reports becuase the Appraiser's Opinion of Value and the Indicated Value by Sales Comparison Approach are different in the reports that she is submitting to lenders on 1 unit residential properties.

In the above example, I think she is making the argument that, since the appraiser needs to consider not only the SCA, but also the CA and Income Approach, the final opinion of value in the above example should be somewhere between $245,000 and $250,000 and not exactrly $250,000, which would be equal to the SCA.

Maybe Ms. Biggers can confirm my understanding of the issue.

If that is that you mean Ms. Biggers, I think that you are misinterpreting the requirement that the appraiser "consider" each of the different approaches to value to mean that all 3 approaches must actually be utilized in the appraisal and given weight in the final reconciliation of value.

 

[VolcanoLvr]

Teresa......

Please contact me privately: dtowne (at) fidalgo [dot] net

I have another appraisal related item to discuss with you.

(You might also set your preferences to include the ability to send you a private msg via the AF)

 

[Terrel L. Shields]

This may be petty but if we keep letting lenders/clients dictate the appraisal process where will we be.

where you been past few years. the lenders are dictating it. have been for some time. That's why I don't do secondary mkt..otoh PE said

exactly how much weight does one give to the cost approach in this market? I would believe in single family residential appraisal the market approach is the most indicative of market reaction and Im just curious as to how much difference you are finding in your reconciliation?

In 9 of 10 situations there is ONE best way to value a property...not 3. And in a residential property, I certainly would weight the sales approach even on new property. ONLY exception would be unique dwelling with multiple improvements, probably on a farm.

 

[Cowgirl]

timd354,

In your example I would have probably shown a Final Opinion of $247,000, not $250k.

Some of you are trying to make it much more complicated than it is and attempting to figure out where I am going wrong. I assure you I am on the top of every approved list for every company I do work.

It is a simple matter for of Sales Comparison Approach and Final Opinion of Value being identical in some AVM opinions. This is usually not the lender but the AVM. It is not about what I give the most weight, as typically it is the Sales Comparison Approach.



Example: $245,000 Cost approach
$247,500 Sales approach

AVM would require, or try to require- $247,500 Final Opinion of Value.

Where I would typically round it off to $247,000 or $248,000 depending on overall evaluation.

 

[Joyce Potts]

Typically if your cost approach is HIGHER than your SA, I suggest analyzing the market for external influences as to why properties in the open market are selling lower than what it costs to replace/reproduce them.

Think about it.

 

[Cowgirl]

Joyce,

The cost approach is lower in these examples, so not sure why you were making this point. But, I assure you I do consider external influences in those cases where it is higher. Which in today's market is not unusual.

 

[Lee Lansford]

timd354,

In your example I would have probably shown a Final Opinion of $247,000, not $250k.

Some of you are trying to make it much more complicated than it is and attempting to figure out where I am going wrong. I assure you I am on the top of every approved list for every company I do work.

It is a simple matter for of Sales Comparison Approach and Final Opinion of Value being identical in some AVM opinions. This is usually not the lender but the AVM. It is not about what I give the most weight, as typically it is the Sales Comparison Approach.



Example: $245,000 Cost approach
$247,500 Sales approach

AVM would require, or try to require- $247,500 Final Opinion of Value.

Where I would typically round it off to $247,000 or $248,000 depending on overall evaluation.

Teresa, I believe that you are attempting to be too precise in your "consideration" of the other (other than the Sales Comparison Approach) approaches to value as your reconcile the approaches to the opinion of MV.

As I stated earlier in this string, I believe that you are making needless headaches for yourself.

Lee

 

[John Hassler]

When in doubt, look to USPAP

Teresa, I would sent the following to your client with emphasis on part "b".



USPAP 2008

Standards Rule 1-6


In developing a real property appraisal, an appraiser must:

(a)
reconcile the quality and quantity of data available and analyzed within the approaches used; and

(b)
reconcile the applicability or suitability of the approaches, methods, and techniques used to arrive at the value conclusion(s).