final value outside the adjusted values

[CANative]

Not trying to be smart here .. but if the above is true .. perhaps a LITTLE BETTER ADJUSTMENT would have been in order.

My initial thoughts are if the value of the subject falls outside the range either the sales are not truly comparable or they have not been made sufficiently comparable via the adjustment process.

I'm sick of that argument. It doesn't hold water. The sales comparison approach has limitations.

 

[Michigan CG]

I've done several REO appraisals over the last 6 months where the Actives adjust out lower than the Sales.
It may well be that I haven't adjusted the Sales sufficiently, but that's because I can't support larger negative adjustments.
The data's just not there.
The end up is that my value estimate has been at the bottom of the range; I say the Actives are telling me prices are falling even faster than my market-data indicates.
.
So......... what am I doing wrong? :new_all_coholic:

The actives ARE your market data. Adjust accordingly.

 

[Motown Matt]

FNMA states (paraphrasing) that if an adjustment cannot be quantified by market data, no adjustment should be made. Why would your opinion be outside of adjustments on a lending assignment? If subject is the top in the neighborhood, the adjustments should bring up the comp values to a value higher than the comps, and that should be that. Sounds like an unsupported value, period. You can add all the explaining you want, but if it's not market driven and adjustable, it's not supported on a FNMA form.

**edit - and leaning on an analysis of actives on the market that have not closed, that's really stretching it...

 

[CANative]

Form Filling at it's Finest.

 

[Mr Rex]

I think the general concensus. Is to shape your "market based adjustments" to make the value fall within the adjusted range. Not so different than tweaking "market based adjustments to be below guidelines or line item adjustments. More form filling mentality than sound appraisal practice. Imho

 

[Thomas Fiehler]

Rex-Is that similar to completing the Cost Approach after you do the Market Approach?

 

[J Grant]

I think the general concensus. Is to shape your "market based adjustments" to make the value fall within the adjusted range. Not so different than tweaking "market based adjustments to be below guidelines or line item adjustments. More form filling mentality than sound appraisal practice. Imho

That does describe backing into value via form filling .

The proper way to find out the value of the subject...find your best comps and do your adjustments. If your subject adjusted value is outside the range then you try to find a sale that brackets the adjusted subject value to prove that buyers will pay more for certain features, or if subject value is below the comps, then you try to find a lower price competitive sale to bracket the lower value, to prove that buyers are penalizing certain flaws or lack of amenities by paying less.

That is the purpose of bracketing, to confirm in the market what buyers are paying/are not paying for. The purpose of backeting is not to make it look good for the underwriter (though that is a side benefit )

Where do you search for a comp to bracket a feature or price with ? It should be in a similar /equivalent area and location and be as competitive to the subject as possible. Brining in a comp from a far superior area, for example, is almost meaningless because by the time you get through adjusting for location, the value is skewed, plus, it is not the same buyer profile because the area is too superior.

Going back in time in subject area is an excellent way to find a comp to bracket a subject value or feature, because though you may have a time adjustment, you have same location influence.

If you find a sale similar location to subject with a larger lot that sold for more than the comps, then you can use that to bracket the sales and prove that the market is paying more for a similar home on a larger lot.

What to do if you can't find a competing sale that bracekts the subject adjusted value? At that point you have to ask if your adjusted value is supportable or not. Maybe buyers aren't paying for an extra large lot in subject area/home type.

A way to check this is to calll area Realtors, and also to research expired and cancelled listings. The things buyers DON'T do is a source of information as well as what they do. For example, your subject may be on a large lot and you adjusted the smaller lots of the comps up, resulting in the adjusted value range for subject being higher than the comps.. You can't find a sale of similar home with a large lot. Researching expired and cancelled listings, you find homes with large lots in subdivision that had high asking prices, that were taken off the market after a year or more on MLS.

You call a realtor and they verify that buyers refused to pay more for the large lots, and the sellers wouldn't come down in price, so they took the homes off the market.

Thus, the market is telling you, that in that subdivision, for that type home, typically motivated buyers are not paying more for larger than average lots. Therefore, even though your subject has a larger lot, it gets no adjustment, and now that you remove the lot adjustment, the OMV is within the range of your comps.

 

[CANative]

This thread just gets better and better.

If your subject adjusted value is outside the range then you try to find a sale that brackets the adjusted subject value

Why? You've already figured it out.

The purpose of backeting is not to make it look good for the underwriter

Yes it is. You've already proven it to yourself so what other reason is there?

 

[J Grant]

This thread just gets better and better.


Why? You've already figured it out.

Already figured what out, the value?

Yes it is. You've already proven it to yourself so what other reason is there?

What are you saying...I've already proven the value to myself so now I stick in a higher price comp to bracket the adfjused value to make it look good for underwriter? If you think that is the purpose of bracketing, that is your opinion.

 

[CANative]

From the OP...

looking at a appraisal where the appraiser's value falls just outside the range of the adjusted values.

At this point plunking in another sale that sold higher for some reason is just dorking it for the underwriter.