Freddie Mac: Quality & Condition Ratings

[J Grant]

Again, makes no difference how we structure the label. The user still decides how much SR1 is enough for their usage. And these users have repeatedly demonstrated that the only limit to the exercise of their alternatives is what they are prohibited from doing.

Its not about how we structure the label, it is about the failure of USPAP which allowed it -

 

[NC Appraising]

I find it funny that it went from most banks not allowing trainees to inspect the home from allowing others to inspect the homes.

 

[ZZGAMAZZ]

Imo the ratings ( and their explanations) are pretty good. However, there should be a plus or minus sign we can add -


C3, or C3-. or C3+ , because there are variants within a condition or quality of a property. We can adjust for it within a condition or Q rating, but assigning a plu, minus or leaving it middle would help explain it.

How about the idea of additional increments rather than just like 1 - 5???

 

[ZZGAMAZZ]

I find it funny that it went from most banks not allowing trainees to inspect the home from allowing others to inspect the homes.

W0W. This is like the most succinct comment ever.

 

[ZZGAMAZZ]

I wasn't referring to a substitution but rather supplemental in order to get appraisers working off the same benchmarks.

When we're only using the data internally for the one comparison and only for reconciling to the one value conclusion the consistency between the ratings for the 3-6 sales in that one SC then "internally consistent" is all that's necessary.

When they're trying to use the same data for larger analyses then the consistency needs to be referenced to the external benchmarks. Internally consistent is no longer adequate; they need externally consistent, too. S#1 has to relate to all the other properties in the larger dataset, not just the direct comps in this one SC.

Doesn't FNMAE at least track the single appraiser's quality/condition ratings of the same property between different assignments?

 

[ZZGAMAZZ]

And you checked to see if that was poured or concrete over block? if the windows were Anderson or Pella and what grade? Sure you did.


Of course, it is but it is still very subjective. You could probably judge the quality level far better by knowing what the original cost of construction was compared to the typical cost at the time the building was constructed. And that is no certitude. We had builders who did very common work but passed themselves off as top shelf contractors simply based upon being one of the older local builders and having ties to state government. They typically drew $10 a SF more than most of their competitors.

This comment might be way off-topic, but your comment above reminds me of a recent coversation I overheard about KB Builders that at least here in SoCal typically is perceived to build fair/average quality homes, although in some new subdivision [I forget where] the builder build good quality homes, consequently meaning that the average quality homes are built specifically and purposely to be average quality. [Probably goes without saying but I found it to be an interesting perspective.]

 

[ZZGAMAZZ]

Fully agreed that appraisers should be ready and able to defend their opinions of value. That said, its my opinion that point values don't exist. We report them all the time, but in reality - there's no such thing. Again, IMO.

I'm curious: from an historical perspective, who decided and when that the default Opinion of Value should be singular?

 

[ZZGAMAZZ]

I have never completed an appraisal where my opinion of value for a subject was different than what I concluded and reported in my appraisal. I am, and expect to remain, 100% accurate in that regard, forever. To argue otherwise is to make the case that you have been misleading.

If appraising were exact, we would not talk about opinions of value and define things in terms of opinions of value. Others would talk about calculated values and others would program their computers to calculate those values. Appraisers would have no use and no value. Arguing that appraisals could be exact ignores the daily occurrence where very similar to nearly identical properties sell for different prices. Each transaction has different, mostly human, buyers and sellers with different motivations and knowledge/advice and experiences and financial wherewithal. Humans being human, there will never be two identical transactions, even if the properties were identical. And there is not enough time and money to verify and measure every difference between every buyer and every seller in every transaction and then develop the impact those differences had on each transaction price. Teams of phycologists and valuation experts and lawyers and many others would be necessary in each attempt, and the outcome would likely be little better than competent, ethical appraisers can do.

Many argue that reporting a range in values would be more useful. To whom? Lender likely rely on a point value because their regulations and programs rely on "the" appraised value. If you give them a range, what will they use? Borrowers will likely argue for the highest every time. Conservative lenders (if they exist) and lenders who keep loans in house and understand risk will likely prefer the lower end more often. And who will determine what value is used in calculating "loan to value" ratios? Will all those benchmarks be revised to state $X +/- 5% or $X +/- 15% or whatever range is suggested in the appraisal? Will that be based on the center of the range, or the upper end of the range, or the lower end of the range?

And what is "a certain confidence level"? Just a statement by the appraiser that will be more meaningless than a point value will ever be? If not, then how is it measured? How is it calculated? How is it's credibility gauged? How is it reviewed?

I don't remember the specifics, but it seems that your perspective often is addressed in court when opposing counsel asks an appraiser about the specificity of his or her OV.

 

[alebrewer]

I'm curious: from an historical perspective, who decided and when that the default Opinion of Value should be singular?

It's been around as long as I've been appraising - and that was the mid-80's.

 

[George Hatch]

Its not about how we structure the label, it is about the failure of USPAP which allowed it -

Concepts and principles, consistent across the entire spectrum of real property appraisal practice. Not limited to Fannie's programs to the exclusion of everything else. Moreover, the GSE program is specific to them and their pipelines. Not to mention being subject to changes as to their own prerogatives. Like with these, for example.,