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Is there a requirement for this?

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Doug in NC

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Jan 17, 2002
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Certified Residential Appraiser
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North Carolina
I know FHA has a sale price bracketing appraisal requirement, but does this apply to FNMA or other lender loans? I've got an underwriter making a big deal because my high sale of 3 was $100 less than the sale price of the subject property. That's a 0.0007 difference according to my HP12c. All 3 sales adjusted higher than sale price. A second sale was only $500 below my property's sale price. Sale 3 was within $5K of sale price, it had no garage and other offsetting features. Considering that the property is in a 60 year old neighborhood with varying degrees of updating over the years, I felt pretty lucky to find the comps that I used. All sales were less than 4 months old and within 0.59 mile of the subject property.

Did I hear something about a tightening of credit standards in the lending markets?
 

Mztk1

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Dec 3, 2006
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As long as you are not adjusted in one direction across the grid, that is all adjustments are bracketed, there shouldn't be a problem, but it is up to the underwriter/lender.
 

Lawrence R.

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Certified General Appraiser
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South Carolina
I didn't see anything after a cursory search, this was as close as anything I saw, and it certainly doesn't describe "bracketing" the subject.


Sales price. The sales price of each comparable sale should be within the general range of the appraiser’s opinion of market value for the subject property. A $100,000 comparable sale for a $75,000 subject property would raise questions about the validity of the comparable.


This was all I saw. Now, is a good idea that whenever possible to bracket the subject. I would think so I try to do it, but it isn't always feasible.
 

Mztk1

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Certified Residential Appraiser
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I don't mean to say guidelines require the house house to bracketed. I don't think they do. I was simply talking about limiting underwriter questions.
 

Tom Woolford

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MAny of my lenders are requiring that the final value be bracketed by the sales price of the comps. Many times its not possible and I have to throw in a junk comp and give it no weight just to please the underwriter.
 

Doug in NC

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Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
As long as you are not adjusted in one direction across the grid, that is all adjustments are bracketed, there shouldn't be a problem, but it is up to the underwriter/lender.
Yes, but doesn't the underwriter make his/her decisions based on the Fannie requirements? I will avoid this situation in the future, but IMO this is one of those situations when the underwriter needed to use her own judgment. Other than the sale price being $100 outside the range of comp prices, this was a really good report. She requested, not one but two additional sales to support the sale price, and even specified that that they had to be east of a nearby 4-lane street (even though my own research indicated there was no locational difference associated with one side or the other in this area).

This is the problem with appraisers now providing 4,6, even 9 sales with each report for the same old appraisal price. Lenders have now learned to expect them and they don't expect to pay a dime extra for all of the additional time and research associated. I really hope the low fee AMC appraisers are now being asked to use at least 5 comps in their $175 reports too. Gonna have to start cutting even more corners now.
 

Lawrence R.

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Certified General Appraiser
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South Carolina
Yes, but doesn't the underwriter make his/her decisions based on the Fannie requirements? I will avoid this situation in the future, but IMO this is one of those situations when the underwriter needed to use her own judgment. Other than the sale price being $100 outside the range of comp prices, this was a really good report. She requested, not one but two additional sales to support the sale price, and even specified that that they had to be east of a nearby 4-lane street (even though my own research indicated there was no locational difference associated with one side or the other in this area).

This is the problem with appraisers now providing 4,6, even 9 sales with each report for the same old appraisal price. Lenders have now learned to expect them and they don't expect to pay a dime extra for all of the additional time and research associated. I really hope the low fee AMC appraisers are now being asked to use at least 5 comps in their $175 reports too. Gonna have to start cutting even more corners now.

I agree about UW's wanting more and more, but I have to say as a caveat, if it takes 5 comps to make the report make sense, than that is what it takes. I am not from the pick three and collect a fee crowd.

FTR, I don't think you are, either. This report just seems like a case of paralysis of analysis on the part of the UW.

But many times, I think appraisers miss the boat and then want to make it sound like the UW is crazy to ask for any explanation or further support.
 

Kevin A. Spellman

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Aug 30, 2003
Professional Status
Certified Residential Appraiser
State
Massachusetts
I believe bracketing sales prices is a direction in value. I refuse to bracket when requested. I provide reliable indicators of value and not a bracketed indicator of value.
 

Doug in NC

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Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
I agree about UW's wanting more and more, but I have to say as a caveat, if it takes 5 comps to make the report make sense, than that is what it takes. I am not from the pick three and collect a fee crowd.

FTR, I don't think you are, either. This report just seems like a case of paralysis of analysis on the part of the UW.

But many times, I think appraisers miss the boat and then want to make it sound like the UW is crazy to ask for any explanation or further support.
I rarely have occasion to use more than 3-4 sales per typical appraisal report. If extra comps are needed, I will provide them. This UW request caught me completely off guard. As I said, I have been at appraising for quite a few years now and I know what and what not is going to cause red flags. This is a first.

FTR, the property did increase substantially in value (explained thoroughly in the report) as a result of a total rehab in the past year; however, I also detailed in the report that 2 of my comps experienced the same level of rehab, experiencing the same or more of an appreciation in the past year. Interior pictures were also provided to verify the property condition.
 

Mike Phillips

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Joined
Dec 16, 2004
Professional Status
Certified Residential Appraiser
State
Florida
Bracketing is good appraisal practice and it is certainly not an "old" requirement. Ideally, the appraiser should present a cross-section of the market in the sales grid. But bracketing is not a goal in itself - best, most reliable support and accurate valuation are the true goals.

Bracketing by sale price and size of living area is preferred in the typical SF residential appraisal since there is usually strong correlaton between sale price and size of living. But if we are talking about a situation where acreage is involved (high LTV ratio) then bracketing by sale price and lot size might be more appropriate.

Hard for me to imagine any appraiser doing many residential appraisals who has not incorporated "bracketing" into their final review. Once I determine my best comps, I'll typically "fill" the high or low end with my next best comp that also achieves bracketing and place weight on it, as I deem appropriate.

Guidelines? I don't really spend much time with them - typically I'm well ahead of the curve regarding "comp" requirements. Been adding additional comps and or listings/pendings, etc., where appropriate for years.

P.S. - I just have a hard time producing reports as fast as some of my peers.
 
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