Gridding sales with adjustments, must comply w/ USPAP?

[Lee Lansford]

...like pulling teeth..

I wanted to contribute more to the discussion, but I'm through with the guessing.

 

[TJSum]

Yes, the OP needs to be clear with the situation, I see he is registered as General Public, so are you an appraiser or not is the first question?

If so, did you do the original appraisal, and is the client asking for more comps that they might have picked for you? Or did another appraiser do the original and the client wants you to make some changes to it? If you are not an appraiser, why are you adding/subtracting things from an appraisal report?

While we are waiting for clarification on this issue, I have a question that is similar for the USPAP experts on the forum. What is the 'minimum" that constitues an appraisal? I have been discussing this on the forum for several months now and have not received a definitive answer. Why is it not considered an appraisal when an appraiser uses listings for a report, and then assigns predicted selling prices for those listings. Why is that not an "appraisal" on those listings ???

 

[Em Tee]

if you are appraising the appraisal for the appraisal assignemnt for the client who provided those appraisal requests and guidelines, then you needn't worry bout the client, as they have already violated all the appraisal requirements per USPAP/FNMA, so call your local appraisal police and have the assignment assigned to the appraiser who first sought to appraise the forward thinking appraisal requestor, with appraisal vigor.

have you noted this is an AAA assignment.....ROFL

YAY!!! Great answer! It's as clear as the question.

 

[Em Tee]

By the way, Jonathan, you've stated in past posts that you're an appraiser. Why does your profile say you're "general public":icon_question::icon_question::icon_question:

 

[Marcia Langley]

Jonathan,

I also think you did not give enough info but here are some general thoughts ...

I uderstand from your posts that:

1. Your original assignment is complete and delivered.
2. The client is not asking you to correct an error or omission on your original appraisal.
3. The client is now asking you to "grid" a new sale on a blank 1004. He refers to that sale as a comp.

Directly to your question, the mere use of the word "comp" or "comparable" indicates that you, an appraiser, are delivering an opinion of value for the subject property (an appraisal). Also, the 1004 grid has column headings that say Comparable 1, etc. which also implies an opinion of value for the subject (an appraisal). Adjustments are further proof that this activity would be an appraisal.

As you said, appraisals have to comply with USPAP.

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All the indications are that this client is asking for something inappropriate. If he already has an appraisal, what could his motives possibly be for asking for another appraisal with only one comp?

If the sale he has provided was closed before the effective date and is more similar, proximate, or recent that the comps used in the appraisal then he should be asking fora correction to the original appraisal or maybe a memo from you regarding why that sale is not comparable (similar, proximate, recent) to the subject.

On the other hand, if the sale he has provided to you closed after the effective date, he is simply asking for a new appraisal that is subject to USPAP.

IMO his request that it be gridded and adjusted on the 1004 is a big red flag that he may intend to use it to "doctor" some other appraisal, maybe yours or maybe someone else's.

 

[Marcia Langley]

Jonathan,

Also, the situation described as "raw sales data is not an appraisal" refers to a list of sales provided by the appraiser that has not been filtered by the appraiser in any way.

If a sale was provided by the client, it in no way falls under that "raw sales data" situation.

Any comment the appraiser would make about that sale as it relates to the subject value would be an appraisal subject to USPAP.

Using the word "comp" or a grid labeled "Comparable" or making adjustments relative to the subject is in fact an expression of an opinion of value regardless of what the client calls it.

 

[Functional Obs]

No value will be given and the sales may or may not be comps. What specific USPAP areas would cover this? I've read in their FAQ that merely providing comps is an appraisal. I would assume providing adjustments to sales (which may or may not be comps) would also fall into the same area. The reason is that you would be using your judgment as an appraiser in measuring those adjustments.

Second question: what about gridding sales without adjustments? Must that be USPAP compliant?

Thoughts?

There's appraising properties ... and there's filling out a form.

A withdrawn or expired listing--even a declined offer--is a comp. As far as USPAP goes, it gives you a lot of room. The idea is that you must "show your work."

So there's no problem until an underwriter reads your report. He doesn't care about USPAP. He doesn't care about why YOU selected YOUR comps. He has his own checklist to work through, and your comps either meet or fall outside of a range that his institution set up.

USPAP = Appraise to find the value.

1 - Use 1 comp or use 25--show your work.

2 - Travel anywhere in your market area to select the best comparables--regardless of distance or zip code. Go outside market area if needed. Consider school systems and other items not on the grid. Show your work.

3 - Use comps that are comps ... that are comparable, similar, alike in appeal ... that are substitutes. Make adjustments using market data.

4 - Go back in time 6 months. Go back in time 1 year. Go back in time 2 years. Show your work. Adjust for time. Yes, I said time, not market conditions. Time is fun to say. Market conditions is not. Use withdrawn listings. Use expired and temporarily off the market lists. Use declined contracts. Interview realtors and neighbors.

Mortgage = appraise to hit a number.

1 - Use 3 comps (because 3 is the magic number). Hit all the key items on the underwriter's checklist.

2 - Don't worry if you skip the house next door to travel .99 miles down the road to the golf course community (since the checklist treats .1 and .99 miles as exactly the same).

3 - Don't get too up set if the next door guy ... if all the next door guys, even ... sold for 30% less than the .99 guy. Use the highest ones necessary to hit your number.

4 - And don't worry if the sale was yesterday or 6 months ago (although nowadays 6 months is probably too far and 3 is the new magic number).

So basically ... figure out if you are appraising the property or filling out the form.