Insufficient comps

[Dublin ohio]

"Got an 2055 assignment from AMC." I just assumed but it is irrelevant to my point.

No argument there. But some of the OP's comments rings of the old Fannie guidelines

 

[George Hatch]

WRT public records data, should appraisers be expected to disregard a FSBO or a broker's pocket listing with similar attributes on the basis of there being no exposure in the MLS?

 

[Mike Ault]

WRT public records data, should appraisers be expected to disregard a FSBO or a broker's pocket listing with similar attributes on the basis of there being no exposure in the MLS?

What about "custom-built homes" and "manufactured home+land package" assemblage sales? Those transactions represent "a meeting of the minds" as well. How far down the "disregard the published definition of market value slope" do we slide?

 

[J Grant]

WRT public records data, should appraisers be expected to disregard a FSBO or a broker's pocket listing with similar attributes on the basis of there being no exposure in the MLS?

I would use it - in some cases, sure -
it was exposed ot somebody to have sold - I'd check with the RE agent and get teh story - if the price was higher or lower than typical because it was a pocket listing I wold explain that, if the price was too far from teh norm then I would not use it.

 

[George Hatch]

What about "custom-built homes" and "manufactured home+land package" assemblage sales? Those transactions represent "a meeting of the minds" as well. How far down the "disregard the published definition of market value slope" do we slide?

Where do any of the above "disregard the definition of MV"?

If a property type is commonly sold from a phone bank boilerroom or at auction or by a broker who already has a buyer lined up, how do any of those pose a problem WRT indicating to MV?

Just because a lender doesn't consider land+home to be indicative of MV doesn't mean the market participants in that market segment see it that way.

 

[George Hatch]

I would use it - in some cases, sure -
it was exposed ot somebody to have sold - I'd check with the RE agent and get teh story - if the price was higher or lower than typical because it was a pocket listing I wold explain that, if the price was too far from teh norm then I would not use it.

I sometimes disclose sales and rents where I cannot "verify" some of the specifics.

 

[Mike Ault]

Where do any of the above "disregard the definition of MV"?

If a property type is commonly sold from a phone bank boilerroom or at auction or by a broker who already has a buyer lined up, how do any of those pose a problem WRT indicating to MV?

Just because a lender doesn't consider land+home to be indicative of MV doesn't mean the market participants in that market segment see it that way.

Unfortunately, using those comparables will generate a repurchase demand from the GSE's & get you turned into the state because they were not properly exposed to the market. The price that a buyer and a builder negotiate when constructing a custom home with a helipad and an underground shooting range to suit a particular buyers taste is not the same price that the property would bring as a spec home being sold on the open market, where the market discounts obvious over improvements such as those. Nobody knows what those custom homes should bring on the open market (market value) until they are exposed and sold as such. My state will practically send the Texas Rangers out after appraisers for using manufactured land/home packages as comparables to support the next land home/package purchase. Long history of over-valuations involved with that practice, which I could post if anybody is interested.

 

[George Hatch]

Those are lender expectations that are specific to those assignments. They're not based on any aspect of the concept of market value itself. If anything, they demonstrate what the buyers in those transactions will pay for that combination.

 

[Mike Ault]

Those are lender expectations that are specific to those assignments. They're not based on any aspect of the concept of market value itself. If anything, they demonstrate what the buyers in those transactions will pay for that combination.

Absolutely agree with you, "conceptually". As a practical matter however, using those transactions as comparables in an appraisal report is "un-advisable", for the reasons I described.

Definition of Market Value​

Market value is the most probable price that 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:

• buyer and seller are typically motivated;
• both parties are well informed or well advised, and each acting in what they consider to be in their own best interest;
• a reasonable time is allowed for exposure in the open market;
• payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
• 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.

B4-1.1-01, Definition of Market Value (04/15/2014)

This topic contains information on the definition of market value.

selling-guide.fanniemae.com

 

[Tom4value]

Got an 2055 assignment from AMC. There are only one comp sold in last 90 day. another comp sold in last 90 days will be 3 miles away AND 30%+ larger GLA. How to proceed? Any suggestion? Client / Lender is off hour already. Due tomorrow evening. Thanks!

You do what you need to do to find comparables that are credible. Period.

My question is why are you having such difficulty finding comps? Is it an odd-ball property? If so, are you sure that you have enough information for a credible appraisal with just exterior inspection from Street and public records? Ultimately, it is you the appraiser who decides if an exterior inspection is sufficient for a credible appraisal, not an AMC or lender looking for speed and low cost.