I am right, right?

[CGinMN]

Thus if we ignore those sales and cherry-pick less similar sales, it opens the door to the appraisal being challenged .

When did I say ignore sales and cherry pick?

 

[J Grant]

When did I say ignore sales and cherry pick?

You never said it, I was pointing it out from my own experience of reviewing.

 

[ZZGAMAZZ]

There are no properties that we are aware of that exist in a universe by themselves. Many appraisers believe there is no relationship between the prices and values of homes that are not nearly identical, or "comparable" (without a definition) to one another and create artificial measures like style to assert a conclusion they have never tested. How could a 1950s ranch and a 1950s split-level of the same size and quality, similarly maintained and updated, and located beside one another, not be comparable to and competitive with one another? It is rather easy to test, and I do so routinely, and never find a defensible difference. Yet, every day, I see appraisers claiming they are not comparable, although I have never had anyone explain how they arrived at that conclusion. There could be a difference in value, but if that can be determined, then the difference can be adjusted for. But if you don't do the work, you are just assuming they are not comparable. That way, you don't have to explain to anyone that different styles don't matter and don't impact value, and don't have to actually know whether or not they are comparable and competitive with one another. The fact is that within a given geographic area, the prices and values of all properties are related to the prices and values of other properties in the same area. It is our job to measure how, and how that impacts values.

...far as that goes, virtually ANY property can be used as a comparable because appropriate adjustments will normalize comp selling prices to create a narrow range of adjusted values, with the corresponding net/gross adjustments as a valid descriptor of how comparable property is, although IMO it's very confusing to determine whether excessive adjustments to ALL comps in the SCA grid warrants further review of the comps and/or the adjustments, e.g., I'm still hung up on the industry premise that Superadequate warrants an inherent adjustment because in the real world better is better, whether quallity or condition or horsepower, etc.

 

[CGinMN]

I wish I could like this 100 times. Theoretically, bracketing is done to support adjustments via sensitivity analysis, but that theoretical "support" is worthless if the additional sale is so dissimilar in other ways that it isn't really even a comparable.

If the subject is a 2,000 SF, 3 BR home with a pool, throwing in a 4,000 SF sale just because it has a pool and pretending that lends support for the pool adjustment is just a fallacy.

One of the reasons we see odd attempts at “bracketing” features is because underwriters request this information to meet the GSE requirement for demonstrating marketability of unique properties. It’s not always about adjustments, it’s the UW thinking they need a sale with pool. Then this practice gets ingrained. This is one small example of how GSE policy negatively shapes appraiser and underwriter behavior. There’s probably many more. Just like the announcement that said the appraiser must illustrate how their market conditions adjustments are arrived. The use of the word “illustration” made a lot of appraisers and underwriters think they needed to include a graph demonstrating support for a non-linear time adjustments. In not too long, some GSE big wig be blaming appraisers for including worthless graphs in their reports that can’t possibly be valid support what the market is doing.

 

[Zoe]

I have no concerns about CU. The first and most significant hurdle is the fee I will require to appraise it. I haven't had any takers yet.

They can't afford you. You know I am lying. LOL

 

[J Grant]

One of the reasons we see odd attempts at “bracketing” features is because underwriters request this information to meet the GSE requirement for demonstrating marketability of unique properties. It’s not always about adjustments, it’s the UW thinking they need a sale with pool. Then this practice gets ingrained. This is one small example of how GSE policy negatively shapes appraiser and underwriter behavior. There’s probably many more. Just like the announcement that said the appraiser must illustrate how their market conditions adjustments are arrived. The use of the word “illustration” made a lot of appraisers and underwriters think they needed to include a graph demonstrating support for a non-linear time adjustments. In not too long, some GSE big wig be blaming appraisers for including worthless graphs in their reports that can’t possibly be valid support what the market is doing.

An aspect of unique or niche properties that gets overlooked by appraisers is DOM marketing time. If regular houses avg 2000 sf take 60-90 days to sell , and the elephant 6000 sf houses are taking 180 -200 days plus to sell the estimated market exposure for a 6000 sf subject should be 180-200 days, but often the appraiser uses the generic 60-90 day, which is misleading

UW is right to be concerned about marketability. The FAnnie/Freddie reps like to tout risk. But risk is back-end defaults, which appraisals are not designed to address. RE sales, ( the SCA approach models a sale ), is all about marketability. And bracketing shows demand, when a feature recovers costs or value exceeds costs and when the feature is a super adequacy and does not recover costs.

But as others have noted, if poorly done, bracketing can mislead or distort results. Bracketing, like other aspects of appraising, requires understanding the market, and despite the robot fandom going on, direct experience, years of interviewing parties, inspecting properties, and knowing what sells and what does not is the X factor that makes a good appraiser. If bracketing is not possible, then something has to show marketability - interview 10 RE agents that specialize in that area or type of property. Use a depreciated cost in a pool or workshop, but if the feature is a view or location, then the cost does not apply. Bracketing is not just for positive features. Bracket the loser property that backs up to a noisy highway or garbage dump with a similar adverse influence. Nobody said it was easy, searching for a good comp or comps to bracket can take hours in some cases. And breaking does not mean the houses have to be the "Same" or any other rigid rule. But it has to make sense, be a property the same buyer for a subject would consider. Otherwise it is pointless.

 

[DTB]

There are no properties that we are aware of that exist in a universe by themselves. Many appraisers believe there is no relationship between the prices and values of homes that are not nearly identical, or "comparable" (without a definition) to one another and create artificial measures like style to assert a conclusion they have never tested. How could a 1950s ranch and a 1950s split-level of the same size and quality, similarly maintained and updated, and located beside one another, not be comparable to and competitive with one another? It is rather easy to test, and I do so routinely, and never find a defensible difference. Yet, every day, I see appraisers claiming they are not comparable, although I have never had anyone explain how they arrived at that conclusion. There could be a difference in value, but if that can be determined, then the difference can be adjusted for. But if you don't do the work, you are just assuming they are not comparable. That way, you don't have to explain to anyone that different styles don't matter and don't impact value, and don't have to actually know whether or not they are comparable and competitive with one another. The fact is that within a given geographic area, the prices and values of all properties are related to the prices and values of other properties in the same area. It is our job to measure how, and how that impacts values.

Spot on, great post!