Final Reconciliation

[DMZwerg]

Stipped because in my report the value indicated by the sales comparison approach doesn't match my final opinion of value. <snip>
So my question is, if your value is primarily based on the sales comparison approach, do you always make the two match exactly?

Actually, I, being a mathematician and having experience in hard science classes as well, try to maintain only 3 significant figures if possible and only "round" SCA to the nearest $100 if rounding to the nearest $500 or $1000 would put it outside the range indicated by the adjusted sales prices or such.

BUT, you mention a more generic question as well ... "Do the SCA value and Final Reconciled Value have to match EXACTLY if value is primarily based on the SCA?"

My answer is "No" and back when I did AMC orders much more than I do now (very rare now) I fired at least one AMC when they would not accept this concept.
(They REQUIRED a cost approach and I so I gave it at least some weight ... they were not happy with my giving the cost approach ANY weight even if my Final was still within the range indicated by the SCA)

 

[Don Clark]

You could always do like the former Appraisal Board member in North Carolina. I looked at one of his reports where he had 3 adjusted comparables. He added the 3 values together and divided by 3 and rounded to the nearest $500.00

What ever floats ones boat I guess

 

[Vermonter]

The SCA and final opinion of value were $110 apart. Just got off the phone with the review appraiser and he said he never heard of this. He said the SCA and final opinion always match. He also said I should have just averaged out the 3 best comparables and rounded to the nearest $1000 and put that in the SCA. When I pointed out there were 4 closed and 2 pendings and each were given an individual level of appropriate consideration he said "whatever....I'll see if I can get it by the client"

I can see both sides, but just don't think the two HAVE to match.....especially considering the amount of explanation I went into in the reconciliation.

Probably a bit more argumentative due to the 32 hours of CE I just finished and the stack of non AMC work on my desk.

 

[RSW]

My final value most always is the same as the value stated in the sales comparison approach section. Look at the definition of market value as stated in the URAR.

 

[Green Hornet]

The SCA and final opinion of value were $110 apart. Just got off the phone with the review appraiser and he said he never heard of this. He said the SCA and final opinion always match. He also said I should have just averaged out the 3 best comparables and rounded to the nearest $1000 and put that in the SCA. When I pointed out there were 4 closed and 2 pendings and each were given an individual level of appropriate consideration he said "whatever....I'll see if I can get it by the client"

I can see both sides, but just don't think the two HAVE to match.....especially considering the amount of explanation I went into in the reconciliation.

Probably a bit more argumentative due to the 32 hours of CE I just finished and the stack of non AMC work on my desk.

Robert,

If it works for you then wonderful. I just don't get it. One, I am not that accurate and two, the market (potential buyers) are not that accurate.

I am not challenging how you do it, it is just difficult for me to wrap my head around it.

Given all the comps are similar to the subject, if you are looking at the adjusted values in the SCA and have:

124,953
125,510
123,940

Seems to me the SCA value should be around 125,000. I am not good enough to say it is 124,981 and my range is never that tight.

Does your program calculate it for you? Since you are using %s, are you applying them in the correct order?

 

[Michigan CG]

In an appraisal report there are actually up to four reconciliations to value. There is a reconciliation in each approach (Cost, sales and Income) and then there is a FINAL Reconciliation.

Should one only perform one approach to value then that reconciled value would also be the FINAL reconciliation.

 

[Riick]

Gee.. and I was taught in every single damn course I've ever taken that
averaging the values of comparables is bad practice.
We are the frickin' professionals and we say what our value estimate is.

If I have three sales that adjust out to
$232,000
$228,700
$227,000
My value estimate needs to be within that $5,000 range,
but, it can be anywhere from $227-$232.

That reviewer is not an appraiser

 

[AnonApprsr]

Should one only perform one approach to value then that reconciled value would also be the FINAL reconciliation.

Agreed, in full.

 

[Vermonter]

In an appraisal report there are actually up to four reconciliations to value. There is a reconciliation in each approach (Cost, sales and Income) and then there is a FINAL Reconciliation.

Should one only perform one approach to value then that reconciled value would also be the FINAL reconciliation.

Agreed, but just never rounded in the SCA (or the cost or the income) always in the final. Obviously rounding in the SCA would avoid this, just never did it that way and nobody ever said anything.

To be honest, the argument is the fact that they didn't read the addendum, which explained everything in detail, even after I pointed it out 3 times. They just wanted me to make the two match. One reviewer said it was a USPAP violation, one said it was a FNMA requirement and the 3rd said it was a client requirement.

After standing my ground, I got an additional revision request with a laundry list of other requests. The final revision I sent quoted their reviewer (who obviously never heard of spell check) giving a page, paragraph and line directions where the comments were in the report.

Also gave them the schpeal about repeat/redundant comments (that our appraisal board hates) and additional requirements not in the initial engagement would require an additional fee.

If they have a "PITA appraiser" list, I'm probably pretty high on it right now.

 

[DMZwerg]

In an appraisal report there are actually up to four reconciliations to value. There is a reconciliation in each approach (Cost, sales and Income) and then there is a FINAL Reconciliation.

Should one only perform one approach to value then that reconciled value would also be the FINAL reconciliation.

Actually, not necessarily ...

... it could depend on whether or not the appraiser addresses active listing in the SCA, and if not if they address them in final reconciliation.

In other words, "should" (or even "could") rather than "would".

I may well be wrong, but from what I have read so far that could be a valid method.