Guideline or Restriction?

[Anthem]

Looking to get some feedback here on a common Fannie Guideline.

"Using an outside sale when appraising in a new subdivision"

long story short we all know we are supposed to use an outside sale or a re sale etc etc to make sure the builder is not setting prices and the prices are reasonable for the local market.

What about when there are no significant recent competing sales?

I have always been taught that you should perform a market analysis to confirm that prices are reasonable then comment as such. If this is done can you still sell to Fannie? or is this an an absolute Restriction???

 

[Anthem]

Sorry I meant to put this in the Fannie section

 

[Ken B]

No resales in the subdivision? Those also fit the guideline. The intent of the guideline is to provide at least one sale that is not directly influenced by the subject's builder.

 

[Anthem]

No resales in the subdivision? Those also fit the guideline. The intent of the guideline is to provide at least one sale that is not directly influenced by the subject's builder.

Correct but sometimes there are no resales or other builders in the subdivision and there are no outside sales that are recent and similar .. so then what? And if so does this make the loan not Saleable to Fannie or is this a Restriction and you are supposed to go to the ends of the earth to find an outside sale then you have to comment that it is not a comparable but used to appease the guideline etc etc

 

[Carnivore]

Preston,

Almost everything with Fannie is OK with explanation. Really, I dont know of many hard fast rules by them with exception to the house and five.

What S/D is it? I wll try and give you a hand if you like.

Hows business at your end of the county?

 

[Don Clark]

Preston,

Almost everything with Fannie is OK with explanation. Really, I dont know of many hard fast rules by them with exception to the house and five.

What S/D is it? I wll try and give you a hand if you like.

Hows business at your end of the county?

Carney,

A very professional response

Preston, why not use a sale more than a year old to demonstrate a sale outside the subdivision, and by all means take carney up on his generous offer.

 

[Walter Kirk]

When there are no outside sales in your market area you should expand your search to competing market areas. For example I recently appraised a unit in a new over 55 community, there were no resales and the builder had just finished building. I used sales in a similar over 55 community in the next county.

 

[Mr Rex]

Preston,

Almost everything with Fannie is OK with explanation. Really, I dont know of many hard fast rules by them with exception to the house and five.

What S/D is it? I wll try and give you a hand if you like.

Hows business at your end of the county?

I didn't realize Preston was in Charlotte, I have always thought he was in North Wilkesboro.

 

[Anthem]

This is purely a Hypothetical ... Lets look at what it says in the fannie selling guide:

For properties in new subdivisions or for units in new (or recently converted) condominium or PUD projects, the appraiser must compare the subject property to other properties in its general market area as well as to properties within the subject subdivision or project. This comparison should help demonstrate market acceptance of new developments and the properties within them. Generally, the appraiser should select one comparable sale from the subject subdivision or project and one comparable sale from outside the subject subdivision or project. The third comparable sale can be from inside or outside of the subject subdivision or project, as long as the appraiser considers it to be a good indicator of value for the subject property. In selecting the comparables, the appraiser should keep in mind that sales or resales from within the subject subdivision or project are preferable to sales from outside the subdivision or project as long as the developer or builder of the subject property is not involved in the transactions.

Notice it says compare to the general market not report a comp, in my statement above you will notice I always perform a market analysis and whether or not I use an outside comp I report whether or not the Market Analysis supports the builder/developers prices.

Now lets look at a requirment in the Fannie Selling guide:

The appraiser must report a minimum of three comparable sales as part of the sales comparison approach to value.

Now lets see a show of hands is the reporting of an outside comp a Requirement or a guideline?

 

[Carnivore]

He is in Mooresville, just south of Statesville.