Is there a requirement for this?

[Offshore]

$100? The UW must feel a need to justify their job. If you're using more than one data source do the revenue stamps or deed get that detailed? Rounding may be the simplest solution.

 

[TITAN1]

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.

"This report just seems like a case of paralysis of analysis on the part of the UW"

Lawrence can I use this in my reports?

If a paralysis of analysis by the lending institution in the consideration of this report for a federally regulated loan transaction where to occur, the appraiser will bill the lending institution for any additional time and effort required to appease the paralysis.

 

[Gregory Beck]

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?

Tell the underwriter the exact same thing your saying here and they should understand and respect your decision. Somtimes it just has to be spelt out.

 

[starmansf]

Bracket the subject with the sales prices and the adjusted sales prices (always), use whatever is available, and if the underwriter doesn't like it tell him/her that's the only deal in town. Maybe they want to do the appraisal themselves. If they want you to do extra work, ok... but charge them, and don't give your services away cheaply. Anything over 3-4 comps and I'll be making extra money.

 

[Doug in NC]

Tell the underwriter the exact same thing your saying here and they should understand and respect your decision. Somtimes it just has to be spelt out.

Nope, they totally don't get it and I'm not backing down on it. I told them to point to a specific valid guideline (lender or appraisal) that documents why additional comps are needed, and I will provide them free of charge. Otherwise, I expect to be compensated fairly for extra work.

 

[LEE VITELLO]

I bracket all my appraisals.

 

[Elliott]

The confidence level (R^2) of your best comparable is let's say, 98%, your
second best comp is 95%, your third is probably 92%. So when UWs
say, hey we want 4 and 5, its sort of silly, they aren't better, their
worst, you have to assign less confidence to them.

I play the game, but give them least weight. I look at it as a tennis match,
the harder and faster you hit the ball back, the more likely you catch
the other guy resting on his heels.

 

[Charles Knutson]

An opinion of value that is higher or lower than the highest or lowest adjusted comp will never fly -- if an underwriter or review appraiser catches it, they will call you on it and reject your report.

The easiest cure is to modify the adjustments in the grid, so that at least one comp is higher or lower than the final opinion of value -- or, change your final opinion value to fall within the final range of reconciled values.

Look at it from the lender's point of view -- if your opinion of value is outside the range of your comps, where did your value come from?

 

[Marcia Langley]

Doug,

I'm pretty sure you meant bracketing of the opinion of value, not the subject's sale price.

But I agree with Jim:

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.

This expectation among lender clients is so pervasive it has become an industry standard and IMO it is not without merit as a general rule of thumb.

And I agree with Mike P:

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.

In general your sales comparison approach should include a broad enough range to demonstrate the relative value considerations for higher and lower value properties.

The term "bracketing" is a shorthand term for "demonstrating the relative value elements."

That said, crabbing about a well supported appraisal is silly when the difference is $100. And clients are famous for taking a perfectly reasonable guideline and becomming ridiculously rigid about it.

But given the pervasive client expectations I would not have delivered the report in that way. I would have added a higher comp, rounded some adjustment, or changed the opinion of value.

 

[Atlanta CG]

Kevin A. Spellman: Thank you, thank you, thank you for someone finally understanding the appraisal process. So many consider bracketing a necessity that they confuse it with USPAP or FHA requirements. It is not a requirement but banks may request it. The other, I forget who, called it correctly when he said he throws in a higher or lower sale that is not relevant but satisfies the underwriter's request. That is professional appraising? Use the BEST 3 or 4 sales - if they happen to all be slightly inferior and the subject slightly higher than their original sales prices, so be it.