How do you reply to these revision requests?

[JeffSH]

Also, I think it's unfair

VALUE: the monetary relationship between properties and those who buy, sell, or use those properties, expressed as an opinion of the worth of a property at a given time. Comment: In appraisal practice, value will always be qualified - for example, market value, liquidation value, or investment value.

Above from USPAP - The "as defined" links to the MV definition as the qualifier for the type of value -stated in the appraisal opinion.

This also agrees with what I'm saying. I'm so confused. The opinion is nothing without the definition.

 

[J Grant]

Market value is the most probable [sale] price that a property should bring in a competitive and open market under all conditions requisite to a fair sale....Implicit in this definition is the consummation of a sale as of a specified date [effective date].
I use "most reasonable" and "most probable" interchangeably. They mean the same to me. Obviously the definition is inferring sale price even though it isn't explicitly stated.
But I agree with this statement.
Can you give a concrete explanation as to why you wouldn't appraise the subject at $100k in my example problem? That would be most helpful in me understanding your point. That's why I came up with the problem to begin with.

Okay- given the example you gave, I would not appaise it for 100k, unless I could find a sale that closed at 100k of a similar property.

The only evidence for 100k are the two pendings - which indicate a price jump over 2 very recent closed sales at 95k and 96 k and an even bigger price jump from 2 other recent closed sales at 90k and 92k. So the trend is all other sales below 96k - if those very recent comps had market condition adjustments applied, to bring their prices current, they still would not hit 100k So it likely would not, in my appraisal be a value opinion of 100k. I would use the 100k pendings to support an opinion at the highest side of the sold comps value range- which might be 96k or even 97k -

What is wrong with appraising it for 96k or 97k and let teh borrower ( if it is a sale ) bring 3 or 4 k to the table to close at their price of 100k?

Buyers are not guaranteed a done deal when they use financing and the same goes for sellers who go to contract with a buyer using financing. If the appraiser is "pushing" the value that last 3 or 4 k ( in this meager price range ) - would you personally contribute that $3,000-$4000 from your own pocket ? Or only doing it since it is the lenders' money -

 

[J Grant]

Also, I think it's unfair


This also agrees with what I'm saying. I'm so confused. The opinion is nothing without the definition.

I agree, the opinion is nothing without the definition,- which is why USPAP says a value opiion must qualified as a type of value - market value, liquidation value, etc.

I know it appears confusing but it is not, it is simple - but specific to appraising .

 

[glenn walker]

Okay- given the example you gave, I would not appaise it for 100k, unless I could find a sale that closed at 100k of a similar property.

The only evidence for 100k are the two pendings - which indicate a price jump over 2 very recent closed sales at 95k and 96 k and an even bigger price jump from 2 other recent closed sales at 90k and 92k. So the trend is all other sales below 96k - if those very recent comps had market condition adjustments applied, to bring their prices current, they still would not hit 100k So it likely would not, in my appraisal be a value opinion of 100k. I would use the 100k pendings to support an opinion at the highest side of the sold comps value range- which might be 96k or even 97k -

What is wrong with appraising it for 96k or 97k and let teh borrower ( if it is a sale ) bring 3 or 4 k to the table to close at their price of 100k?

Buyers are not guaranteed a done deal when they use financing and the same goes for sellers who go to contract with a buyer using financing. If the appraiser is "pushing" the value that last 3 or 4 k ( in this meager price range ) - would you personally contribute that $3,000-$4000 from your own pocket ? Or only doing it since it is the lenders' money -

In this scenario I am either at $95,000 or $100,000 as I can defend those numbers but not $96-97-98- $99K
as that is too precise and I'm not that good. Also nothing ever gets me more riled when I was on review desk and some idiot had a sale at $300,000 and he came in at $298,000 or $299,000. It also makes buyers and sellers go bats and those all end up in ROVs. Most buyers and sellers can understand a $5,000 or $10,000 difference but not a $1,000 to $3,000 difference. This shows the appraiser is a micro-manager.

 

[JeffSH]

Okay- given the example you gave, I would not appaise it for 100k, unless I could find a sale that closed at 100k of a similar property.

The only evidence for 100k are the two pendings - which indicate a price jump over 2 very recent closed sales at 95k and 96 k and an even bigger price jump from 2 other recent closed sales at 90k and 92k. So the trend is all other sales below 96k - if those very recent comps had market condition adjustments applied, to bring their prices current, they still would not hit 100k So it likely would not, in my appraisal be a value opinion of 100k. I would use the 100k pendings to support an opinion at the highest side of the sold comps value range- which might be 96k or even 97k -

What is wrong with appraising it for 96k or 97k and let teh borrower ( if it is a sale ) bring 3 or 4 k to the table to close at their price of 100k?

Buyers are not guaranteed a done deal when they use financing and the same goes for sellers who go to contract with a buyer using financing. If the appraiser is "pushing" the value that last 3 or 4 k ( in this meager price range ) - would you personally contribute that $3,000-$4000 from your own pocket ? Or only doing it since it is the lenders' money -

If you don't use pending sales from last week in your appraisal and you don't given them similar weight to the closed sales from last month, then you are giving your client a one-month old valuation.

Offers are the best indicators of value in changing markets. Say there's a selloff and the market is tanking HARD. The best comps you have are pending sales from last week that clearly adjust lower than your most recent closed sales from 30-60 days ago. If you reconcile towards the closed sales from 30-60 days ago instead of the pending sales from last week, then you are not providing the most probable price as of the effective date. You're providing the most probable price from last month.

 

[J Grant]

In this scenario I am either at $95,000 or $100,000 as I can defend those numbers but not $96-97-98- $99K
as that is too precise and I'm not that good. Also nothing ever gets me more riled when I was on review desk and some idiot had a sale at $300,000 and he came in at $298,000 or $299,000. It also makes buyers and sellers go bats and those all end up in ROVs. Most buyers and sellers can understand a $5,000 or $10,000 difference but not a $1,000 to $3,000 difference. This shows the appraiser is a micro-manager.

Well his price range was so low 90-100k so we were stuck with it, but at a SC of 300k would be pretty odd to value at 299k or 298k

That said , 96k is not any more or less precise than 95k. They each are simply a finite $ numerical amount. And if one is better supported than another, then opine it -I recognize we round up or down typically for adjustments, and even for point value in larger price ranges, but in a lower price range like this , a $1000 counts

But teh real reason is the highest sold price in his example was 96k, not 95k, so the appraiser is supposed to be "that good " -96k was the highest sake comp so makes sense o reconcile at 96k than 95k since we are considering the pendings at 100k -But if you had a reason for 95k other than silly rounding precision then go for the 95k -

 

[J Grant]

If you don't use pending sales from last week in your appraisal and you don't given them similar weight to the closed sales from last month, then you are giving your client a one-month old valuation.

Offers are the best indicators of value in changing markets. Say there's a selloff and the market is tanking HARD. The best comps you have are pending sales from last week that clearly adjust lower than your most recent closed sales from 30-60 days ago. If you reconcile towards the closed sales from 30-60 days ago instead of the pending sales from last week, then you are not providing the most probable price as of the effective date. You're providing the most probable price from last month.

Well I am on board with using the pendings ( to show a price trend ) however, saying I have to weight them similar to the closed sales -nope, though in some appraisals they can get more consideration than in other appraisals. .

Pendings are tomorrows value, if and when they close, but we are still in the current as of eff date .The closed sales from their contract date are bought to current eff date by applying the market condition adjustments. So it is not a one month old value, it is a current as of eff date value.

By appraising to the pending price, you are trying to give the subject a tomorrow predictive value.
And if your pendings do not close or close at a different price and you put a lot of weight on them that is a problem -

Offers are the best indicators of value in changing markets.

Offers are the best indicators of PRICE TREND in changing markets.

We don't know the relative value yet of a pending and won't know it day after closes either.-people over paid or under paid or paid a MV equivalence - we can't know that until some bit of time passes, even a few months-the reason closed sales are used to establish value, because enough time has elapsed and other sales took place to see the comparative perspective and price patterns .

 

[Tru Red]

(which is almost two full pages of commentary).

You mention your narrative is almost two full pages.

My narrative for a standard 1004 is between 6 and 9 pages depending on complexity.

"Lucy, you've got some 'splaining to do!"

 

[J Grant]

MV purpose appaisal is not to predict the sale price subject would get if it were on the market on the eff date and still taking offers - MV definition is a weird hybrid of most probable price ASSUMING CONSUMATION OF SALE AND PASSING OF TITLE - so it is a weird model of a hypothetical "sale" that takes place as of the eff date -

That is why MV opinions can seem slightly retrospective, even when we apply market condition adjustments to bring current to eff date - closed sales in all kinds of appraisals are used to establish value, because enough time and other sales have occurred for the trends, patterns and perspective to emerge.

Therefore, the closed sales establish a reliable value vs a pending which is more predictive in nature . Rarely is an appraisal purpose a prospective future value and when it is the assignment such as in relocation appraisal a rather generous margin exists because it is not possible for a prospective, future value to be very reliable.

 

[J Grant]

You mention your narrative is almost two full pages.

My narrative for a standard 1004 is between 6 and 9 pages depending on complexity.

"Lucy, you've got some 'splaining to do!"

Well I don't write 6-9 pages either (unless it was needed) - succinct commentary is fine too if it gets the points across-imo.