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How Much Info Is Too Much?

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Valueseeker

Junior Member
Joined
May 19, 2016
Professional Status
Certified Residential Appraiser
State
Massachusetts
Hey everyone,

many of the reports completed by my office tend to be brief in regards to the market data. Depending on who completes it, it will vary but more or less it's a 2 year overview of the subjects market with absorption rate, and months of standing inventory. Some overall market commentary as well.

I really want to add more to my reports (simple regression analysis, and some graphs and data showing the town/market data (median price by month, reos, concessions , etc)

Can anyone share what they consider must-haves in their reports to support or show their market analysis? Because all that I am used to is rather succinct, I'm reluctant to add more. Less is more? Keep the rest in the workfile or put it in the report?

Thoughts? Thanks folks
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Look when the owner bought the house. If within the past 10 years I do the overall market data for sale prices so they can see how the market has changed over their ownership. I especially like starting the data from 2007. That way they get a better understanding of why the property may not have appreciated above what they paid, or what they've heard about "recovery". It's harder for them to argue or be shocked. Also include discussions concerning interest rates. HUD neighborhood data and the financing ( or not) of the sales in the market area.
 

Michigan CG

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Nov 1, 2006
Professional Status
Certified General Appraiser
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Michigan
Less is more? Keep the rest in the workfile or put it in the report?

Whenever I hear the argument that less is more I cringe. Let us say one does 250 reports per year and two years after turning in a report there is a complaint. Can the folks who say "less is more" recreate how those adjustments were derived from information in the work file?

I explain almost every adjustment in my residential reports and include charts and graphs. Is it extra work? Sure it is. But it is part of CYA for that one time you will have someone complaining about a report.

I remember a saying by a respected friend, Brian Kirksey, MAI, SRA, ASA. It went something like this: "We don't put all of the extra stuff in the report for the reader, we put it in for ourselves." He was referring to protecting yourself.
 

Michigander

Senior Member
Joined
Oct 23, 2003
Professional Status
Certified Residential Appraiser
State
Michigan
I have a horrid memory and I just write what I need to in order to be able to completely understand why I did what I did if I pick the report up in a couple days. Although I have workfiles (like we all do), it is easier for me to understand myself if I just explain it instead of look at notes and spreadsheets.

I had an appraisal request a few months ago for a report I had originally completed in 1994. They wanted a new appraisal for a different purpose and although my workfile was long gone, my report had enough information in it to remind me of why I did what I did then (yes, I had my old report still) even though much of it was no longer pertinent, some of the information was good to have, including my description of the improvements from the time. As CG said, we put the information in for ourselves often as much as we do for the clients (paraphrasing) and I am not of the mind of less is more. I am also not of the mind of meaningless information in for filling a report though, so the information included has to be relevant to the problem at hand.

To the original question, my market area analysis are pretty in-depth and I include all of it for the client AND for myself. I will refer back to older reports often to compare one period to another or for reference in doing retrospective work.
 

Red Flint

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Joined
May 15, 2005
Professional Status
General Public
State
Michigan
I think the guy who wrote the book ‘Market Analysis and H&BU’ later had a white paper that showed how the value of the subject can be determined solely using market analysis, it was a beaut. This is how powerful this part of valuation is. Market analysis results feed the determinations in highest and best use, which then leads to fundamental understandings and directions that can be applied to the three traditional valuation approaches.



One of the conundrums is to understand the desires of market participants. A market value determination is the expected future sale price, within the marketing period, that can be expected from a potential cast of similar participants, all of whom are similarly knowledgeable about the market without inside information or advantageous financing. So, a historical analysis of market trends is valuable, but also critical is to determine the expected market, which comes from area analytical experience, and can be strengthened through market contact, direct discussion with buyers, sellers, brokers, financiers, etcetera.



A worthy endeavor is to carry the market analysis results through the valuation, beginning with H&BU, then within each approach and reconciliation, and importantly, in the final reconciliation of value. This is difficult to do when form constrained, but can be artfully included in narrative explanation. Write on.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
What I create is a summary appraisal report. It isn't intended be a classic novel or even a novella. It's a form appraisal with a few addendum's. I guess you should consider who the intended user is and what is the intended use.
 

Slappy

Sophomore Member
Joined
Mar 2, 2010
Professional Status
Certified Residential Appraiser
State
California
I run a regression analysis for the neighborhood a few times a year ( I use ACI Analytics - it takes about an extra 15 minutes). I use it to support my GLA adjustment. The graph I include in the report also looks pretty spiffy. In neighborhoods with low conformity and where regression is not useful, I state in the report that I ran a regression study and that it was not useful. I have yet to be asked by a lender to justify my adjustments. Although regression is becoming more useful with advancing technology, i strongly advise that an appraiser take a couse or two so to understant its utility and limitations.
 

Michigan CG

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Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
I really want to add more to my reports (simple regression analysis, and some graphs and data showing the town/market data (median price by month, reos, concessions , etc)

Can anyone share what they consider must-haves in their reports to support or show their market analysis?


I posted a good part of my addenda on this forum sometime in October or November in a thread. I cannot find it right now. I got some private messages about it thanking me. Some say it is overkill but I use it for all types of work, not just lending. If you are bored I am sure you can find it.

Here is a sample of some of it:

upload_2016-12-28_21-49-45.png
 

A K

Elite Member
Joined
Jul 31, 2013
Professional Status
Certified Residential Appraiser
State
Maryland
These are the best kinds of posts.
 
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