How to respond.

[Fred]

I personally believe appraising is both art and science.

Thanks for you substantive comments, but let's not do the art-science, subjective-labels, dead-end in this thread. ( I personally believe appraising, like anything else, is what the person doing it makes it into).

I don't make a big deal out of most adjustments on reviews, except when they are obviously and provably incorrect.

Is that whether or not the incorrectness puts a noticeable skew on the results?

 

[The Warrior Monk]

Is that whether or not the incorrectness puts a noticeable skew on the results?

Yes.

I'm actually surprised that I haven't been dumped as a reviewer because of this.

 

[Non Sequitur]

I have such a different take on this.
I think the proximity guidelines are beyond my reach. Where can I find them?

In a big picture way, what difference does it make if the person ...snip...

Got me on the proximity guidelines, but we all know UWs/lenders balk at comps 3 miles away in a high density urban area, that's why I said "typical". I'm not saying don't use a comp 3 miles away, but don't be a ding dong and not add a little narrative. I'm not for writing a novel, novella, or even a short story. A few sentences may do the trick.

As far as why, I agree it's not a review for best comments, but there is an expectation that the report actualy says something and IMO adds to the credibility of the report. If comments don't mean anything then why have guidelines and standards? Why have a report if the words don't have to mean anything? I for one believe all of those check boxes and questions in the report actualy mean something and should have an appropriate response. If not just turn it in blank with a value at the bottom.

Everyone, thanks for the responses. Debates like this is why I come here.

 

[Fred]

CL,
I understand. You are saying if something is addressed, even though it requires no treatment, it boosts your confidence that the persons eyes were open.

 

[Non Sequitur]

Steve, I think we're on the same page but approach it differently. A UW stipped me last week asking for comments on the difference in value from the subjects last purchase 3 yrs ago. The first thing that came into my mind was I thought the 2 comps on the same street, one two doors down, did that. But then I realized that one sentence would do the trick because the 2 comps were so strong. As you said earlier, it's comp selection not comment selection. But when the comp selection is done properly the comments all but write themselves.

When I'm reviewing a report I hate checking "No" when asked if the the info in the subject section is complete, contract section or neighborhood section. I've been called chick **** for it. But when the legal description says "see title", the tax data is all N/A, the contract section says under contract for $100K and the neighborhood section only the infamous "A well developed residential area close to schools, playgrounds and employment" what else can I do? Some might say the boxes mean nothing, are irrelevant and do not affect the value opinion, but to me it's chicken **** to ignore them just because someone may need to write several reports a day.

We all know why many reports lack anything but the most basic boilerplate, I think if we're not carefull appraisers will boilerplate themselves out of a job.

 

[Mary Tiernan]

Forgive me, I can't figure out how to use the quote feature. (well, am computer challenged, flooded with work and don't have time to find out, but want to stay in this thread for another post)

Posted by Steven Santora:

Comp selection is vritually everything and adjustments are virtually nothing

However, with problems like:

Each of the comparables in original appraisal have inferior site size, with adjustments for site size made across the board. Review appraiser unable to determine how adjustments were calculated due to lack of analysis in original appraisal.

I believe the adjustments applied across the board lack substance, and should be questioned.

You state

How can an adjustment be applied to all all 1 acre site comparables if you have no 5 acre sites in the report to prove it?

So, without lack of analysis as to where the adjustments are derived, whether it be other non-relevant properties with 1 acre and 5 acre sites, and a market derived adjustment from that applied to each across the board, I just have to figure it was pulled out of his butt, and that ain't just nothing, that is sh*t.

The paragraph:
Due to lack of analysis of appraisal procedures followed, lack of analysis of adjustments applied, and inadequate summary of opinions and conclusions in original appraisal report, review appraiser is unable to adequately analyze original appraisal.

by itself does not quantify the reasons for the statement, but the paragraph before that does.

Steven Santora further states:

It seems to me that if the comps are the best available, almost anything within or near the range could be credible - whether adjustments are made or not. I have taken dozens of reports, logged the comp prices, averaged them, and listed the final conclusions. Very rarely does the final conclusion of value stray from the averaged comp prices by more the limits of a two-digit round off.

Well, i work a rural area, and if my job were any where near that simple, I'd be a happy camper. I belabor over each and every report trying to analyze the market; there aren't 3 ten acre parcels anywhere, there aren't three 1,200 square foot houses with no basements anywhere. I'd truly hate to think I was wasting my time.

If I am reviewing and adjustments are inconsistent, applied across the board, or lacking for superior amenity (such as waterfront that isn't even mentioned) then I'm going to point this out to my client, and I'm going to believe that the adjustments are more than just nothing.

 

[Otis Key]

Steven-

My suggested statement is "my" general statement; in my reviews, I then list the specifics that I think are significant. As a reviewer, I find inconsistencies or errors to be in two classes: Trivial and Non-Trivial:

The trivial ones could be typo's, the wrong specific zoning description (as long as the zoning itself is correct and the subject's conformity or lack of is correctly indicated), perhaps a date on the comp (1996 vs. 2006, when everything else matches with my 2006 data), etc. A trivial item or even a number of trivial items may have no impact on the overall credibility of the report. Some, while trivial to me, may be significant to the lender; the appraiser's correct license expiration date, for example, when I've already verified the license is current and valid. As a rule, these are not "significant", although I may list them for my client's benefit. When I do, I state that I do not consider these items "significant".
If enough trivial issues are present, I may begin to question the quality of the report. A sloppily written report detracts from its quality and credibility, which I am charged with forming an opinion about. If this is the case, I do consider this significant, and again, state my reasons. However, the value may still be supported in the market. This is an example of a report that "hit" a reasonable value but is so poorly presented, one has to question the competence of its reporting, if not development process. We read about these instances all the time.

A non-trivial issue is one that I find significant to the credibility and usually value of the original report. These can be when comps are provided, a general "these are the best comps" statement included, yet I find what appear to be more proximate, more recent, and/or more similar sales. Or, when a subject is a 2br home, all comps exceed 2br in configuration, and there is no explanation about market acceptance of 2br homes or the appropriate market adjustment between the two (the buyer pool for a 2br home is typically different, and smaller in my market than that for the 3br home).

My bold.

Denis, I'm surprised (don't ask why). I've seen may a "appraiser" (used because they do still have a license) who has used a sale from 2000 and changed it to 2003 just because it would make the data fit the appraisal and help the appraisal appear to be justified at showing an opinion of value that was CLEARLY not supportable at that time.

I've also seen sizes changed from 2,400 to 1,800 to help "bracket" the subject's price/sf. And even a sale price, or 100, changed from $150k to $180k.

So I guess my surprise is that you would consider it as trivial. Those tend to be the first things (well, maybe once I really get into it) that pop out at me. As you well know, an informed and experienced appraiser can just scan an appraisal and know that it's going to be a long day of reviewing just one report - THIS one!

 

[hastalavista]

My bold.

Denis, I'm surprised (don't ask why). I've seen may a "appraiser" (used because they do still have a license) who has used a sale from 2000 and changed it to 2003 just because it would make the data fit the appraisal and help the appraisal appear to be justified at showing an opinion of value that was CLEARLY not supportable at that time.

I've also seen sizes changed from 2,400 to 1,800 to help "bracket" the subject's price/sf. And even a sale price, or 100, changed from $150k to $180k.

So I guess my surprise is that you would consider it as trivial. Those tend to be the first things (well, maybe once I really get into it) that pop out at me. As you well know, an informed and experienced appraiser can just scan an appraisal and know that it's going to be a long day of reviewing just one report - THIS one!

I probably didn't express myself clearly; let me try again:

If a report says 1996 for the close of escrow date, and I look up the sale and find that everything is consistent (doc#, sale price, property condition/configuration, etc.), then I assume the 1996 is a "typo" since everything else matches the current (2006) data. That would not constitute significant (non-trivial) issue with me; I'd figure it was fat fingers on the key board; but I would advise my client (who would probably insist it be corrected).

Now, if somebody tried to use a 1996 sale as current data, that's a little different; like you, I'd consider that very significant.

Does this make any sense?

 

[Tony Blackburn]

Mr. Hatch....

"The boilerplated comment about the sales being the best comps do not provide meaningful analysis ...."

FNMA and other lenders, back in the old days, used to get stinky about excessive "Boilerplate", and rightly so. I remember some lenders where it was an actual guidelines, not to use excessive "Boilerplate". Now it is more the rule than not.

I bet you remember that. I use a boilerplated comment about excess boilerplating all the time. OK, I'm just kidding. I switch some words around sometimes.

But seriously folks, we do rely on our templates, to do too much of our commetary and analysis.

 

[Fred]

CL

Steve, I think we're on the same page but approach it differently

I hope that doesn’t mean I read the book backwards and upside down.

Tony
I remember a survey published in TAJ about 12 years ago. Too much boilerplate was the number one complaint.

Denis

I find inconsistencies or errors to be in two classes: Trivial and Non-Trivial:

There more shades of gray than that.

the reader, cannot reasonable understand why the report has one set of comps or uses one set of adjustments when the market data I'm looking at (presumably, the same available to the originator) indicates another set appears more appropriate, then it is accurate to say the report has inadequately explained itself

That gets to my main point. The explanation is missing (inadequate) either way: whether your retracing finds the process did or did not produce reasonable results, the explanation is not there. Something triggers the avalanche, and then the detailed and stock criticisms come. In the first post, it was misuse of the phrase extraordinary assumption.

Your analysis is probably a little "deeper" than what is found (or required, given the intended use) of the residential reports I typically review.

I wouldn’t say that. It's just houses, right?