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Incompetent 'two'... Seems To Be A Badge Of Honor

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Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
A client of mine is getting tired of requests for value reconsiderations, which are patently out of line... her indication was that she has an extraodinary number of them at present...

I took Pam's recent response and changed it to fit MY situation. IF this helps anyone else in their response to idiotic reqeuests, USE it with my blessings

despite being redundent in places, this in now in my biolerplate repertoire:

cut and paste at will....

I am in receipt of your request for a value reconsideration, along with the appraisal performed by another local appraiser at the time of the sale to the current owners, approximately 8 months ago.

First let me state that when the owner offered to allow me to view an appraisal, I indicated that I preferred to form my own value opinion, unbiased by the work of any other appraiser. I did NOT accept a copy of the proffered report.

I DID indicate an interest in viewing the upper level measurement sketch, as a check against my own measures on the fairly complex upper floor. Because American National Standards Institute (ANSI) standards require an appraiser to measure to the outside walls, (impossible in the case of an upper level floorplan like the subject). I always welcome a check on my figures. Appraisal standards require attempting minimal variance with other professionals performing the same service. 5% is considered well within industry standards. I found my measures to fairly closely match those arrived at by the appraiser whose report you provided me. Including all stair areas, is a common practice of many appraisers in this area, but a measurement method which I abjure in favor of the ANSI method, which I feel is more consistent. I therefor typically eliminate any stairs to top floors - as already counted in basement or lower level areas. The other appraiser did include this area. We have a very minor difference of opinion of size.

As a second point of order, let me state that I have NOT performed a review of the report that you provided to me. It is my opinion that the author of that report is a highly competent individual, with whom I seldom find any even minor professional differences of opinion when hired in the capacity of a reviewer. I have not in this case been asked to perform a review, for which on 'a typical house' I am normally compensated in an amount quite similar to that I charge for an appraisal. I am bound by State law not to comment on the value opinion of another appraiser unless I have performed a full review according to USPAP Standard 3. If you desire me to perform such a review I would be willing to do so. I would point out that an appraisal variance of 4% on appraisals with identical effective dates, is considered to be a very high rate of correlation among professional review firms, Relocation Companies, and other measures of appraisal standard inclusive of the entities which oversee the Kansas State County Tax Assessors (County Appraisers). The two reports' value difference (which again is based on different effective dates and 2/3 of a sales' year worth of different comparables) falls just outside that 4% margin. My value opinion was coincidentally well under that margin when considering the price paid by the homeowner 8 months ago. Apparently my opinion of value is markedly similar to that which the homeowners, as buyers spending their own money, perceived the home to possess in the way of market value.

The Definition of Market Value, as indicated on the Fannie Mae Form 1004B, attached to my appraisal report is a very important definition to fully understand when developing a value opinion. I am including it, with certain areas highlighted to bring specific attention to areas pertinent in this case.
~~~~~~~~~~~~~~~
DEFINITION OF MARKET VALUE:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he considers his own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions* granted by anyone associated with the sale.

(Fannie Mae Form 1004B 6-93)
~~~~~~~~~~~~~~
As a Kansas State Licensed Real Estate Appraiser, I must abide by USPAP, Uniform Standards of Professional Appraisal Practice, which as I understand it is adopted as Law by the State of Kansas. In any case my defined Professional Ethical Standard specifically states that appraisals cannot be contingent upon a desired appraisal or valuation amount, favor the cause of the client, and that the valuation must be as per the above definition.

As an appraiser completing an appraisal for a lender/client, I sign every report stating that I have completed the appraisal using the above definition of market value, and in compliance with USPAP. That is, again, specifically stating "most probable price". The PROBABLE PRICE being based on my professional opinion. Contrary to the belief and or desire of many mortgage brokers, homeowners or lenders, probable price is not the "highest possible price" nor even "the price someone paid a few months ago".

Similar to not using sales that are atypically low and likely do not meet the referenced definition's qualifications for being a qualified comparable sale, (typically a distressed sale caused by pending divorce or foreclosure or transfer); using sales atypically and obviously higher than typical sales of similar properties and giving that one sale primary weight is not proper appraisal practice and would put my appraisal license in jeopardy. I did use that one sale (the subject) that is obviously above what is typical in this subdivision. I did fully explain within the comments in the appraisal report the apparent fact that this sale appears to be slightly higher than is typical for this subdivision, and gave it minimal weight in my final reconciliation of the subject current most probable value. I do understand how this property could have legitimately appraised for the price it was sold for, based on sales that proceeded it within Fannie Mae Guidelines as of THAT effective date. One of the primary lessons in beginning appraisal classes is that one sale does not make a market. Another Fannie Mae Supplemental Requirement is that an appraiser is expected to use TIMELY sales. I will here point out that some of the sales used by the appraiser in formulating an opinion of value 8 months ago were no longer timely at the time of MY assignment.

I have no specific opinion as to the overall effect on the subject specific sub-market value of local and national events which might affect a buyers actions. There have been numerous events such as the continuing aftermath of 9/11, the more recent Stock Market Crash, closings of local businesses and employment centers and lay-offs among some businesses which have historically remained steady. There is insufficient data from which to draw a firm conclusion that market values have declined, in fact based on the limited data available, and as indicated in the report, it appears that there has been a SMALL appreciation. The fact remains however that some proximate sales within the subject and adjacent subdivisions have sold for less than some of the sales used just a year ago. I used 6 comparables in an effort to provide a full view of the subject submarket. I did search back in time in excess of the preferred 6 and 12 months time frames, in an effort to locate proximate but less timely sales of similar style/design. None were found. I did explain my adjustments and reasons and rationale in the report.

One possibly over-priced listing which results in a closed sale in a specific subdivision does not create a new market value for all the other properties there. When a sale like that one becomes the benchmark that Realtors use in pricing the new listings - or when an appraiser bends to the pressures applied by parties that should not even be in contact with the appraiser and 'makes a value' that may not be justified, a subdivision can become skewed in values. When people from other parts of the country are moving into a market that they have no direct knowledge of and hire a Realtor, as a buyer's agent or not, they expect to be 'well advised' and that the Realtor they are using will know and abide by the Realtor's Code of Ethics. It takes a number of closed sales to indicate a significant change in market value and buyer appreciation in an area.
Listing a property is in all cases ultimately at the order of a seller. A seller may hope unrealistically and be rewarded by receiving their 'hoped for' price.
Listing a property far too high is not in the spirit of the Realtor's Code of Ethics.
Article 1: "When representing a buyer, seller, landlord, tenant, or other client as an agent, Realtors pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve Realtors of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, Realtors remain obligated to treat all parties honestly.
Article 2 states: "Realtors shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction."

If a realtor lists a home terribly far out of line, they do a disservice to the seller, themselves, and any potential buyers.

When a buyer pays what they personally think a house is worth and are happy, even if it was at the absolute pinnacle of value for the area, it is a fine thing~ for the seller and the Realtor. Their commission is based on a percentage of sale! Attempting to refinance a short time later and finding that ones investment has not prospered beyond the stock market is an unhappy event, for the buyer. I would point out that the housing market has happily NOT followed the stock market into a decline in THIS geographic area, other areas are not in the same situation. House prices can in fact fall.An appraiser's job is neither to make sellers or buyers happy, but instead to report a professional opinion of value.

I stand by the appraisal report I completed. I understand a need to respond to client concerns, however I will point out that no appraiser is going to lightly encourage having to respond to queries of their value opinion. Sending in a value opinion which is below the 'needed value' typically results in such a query. It is far easier to render an opinion of value based on the "the highest, most optimistic, and needed value" rather than the proper "most probable price" , however by so doing: the needs which resulted in the formation of my profession are NOT being met. Please recall the Savings and Loan Crisis, for which bailout, I believe we are still paying tax monies annually.

I consider any attempt to pressure an appraiser to make a value that should not be made, to be lender pressure, which is promoting a situation which leads to financial difficulties for lenders, borrowers and the banking industry as a whole. A difference of opinion of value over a period of 8 months cannot be explained without dual reviews and a market time analysis. While I have performed a time analysis, and certainly understand my own work, I have not performed a review on the proffered appraisal, in developing this response. Again, I stand by the appraisal report I completed. If the reader of this response desires further explanation, please consult another area professional for a competent USPAP Standard 3 review of my work, or the work contained in both professional reports.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
:redface: but I spellchecked the quoted :usa: part...
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
My Gosh Lee Ann, thats an Epistle not a letter!! Can't you shorten it up and say the same thing??
 

Dale Smalley

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Florida
How about.
This appraisal is my opinion. If you want to pay more than what the property is worth it is entirely up to you.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Yeah, but sometimes, it really feels good to write something like that!

Good job Lee Ann!!!!! I like your additions.

where is that emoticon with the raised fist? :rofl:
 

Patti Jury

Senior Member
Joined
Mar 23, 2002
Professional Status
Licensed Appraiser
State
Colorado
Yikes.. I hope you charged extra for that... :rofl: :rofl:
 

Theresa in Oregon

Sophomore Member
Joined
Jan 18, 2002
Holy Cow! Good Job, Lee Ann!

As an added benefit, by the time all parties to the deal finish reading it, the subject property will have appreciated in value some. :p :p :lol:

Theresa
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
HO is a judge.

I got mad.

dumb waste of time.

I feel better now :huh: i think.

I knew it was coming before I even I got there.

HO was all about what they were GOING to do to the property..

I splained twas as-is, not subject to unless told so by lender.
 

Mike Simpson

Senior Member
Joined
Jan 30, 2002
I'm more than happy to accept a copy of an appraisal.

I make copies of it...stuff it in the file, and mail back the original.

You'd be surprised at what you'll see out there.

-Mike
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
yeah - well I make it a point to NEVER accept an original from the HO cause sure as shooting they are gonna claim I lost it.

As these folks did.
I never even SAW the thing on site, cause they couldn't FIND it :rolleyes: .

~~~~~~~
First demand was that I give it BACK :angry: .

Never took it said I...

:p .~~~

How can I comment when I didn't see,
and didn't WANT to see it. :eyecrazy:
 
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