JPMC REQUIREMENTS for Reconciliation

[alebrewer]

I’m not usually the kind who tolerates too much cleverness in wordplay, but the very word “weight” is inherently ambiguous.

In one sense it measures heaviness with scales (exemplifying math, including percentage) and in the other sense, it means to assess the nature or importance of something especially with a view to a decision or action (judgment).

The very word “weight” as applied to appraisal generally - and to reconciliation of value in particular, - couches judgment in the language of math.

This is one reason we have the eternal debate whether appraisal is science or art. In my view, it’s both. Market facts are analyzed via formal and normative processes, then judged through the lens of reason tempered by experience.

I don't disagree. What I would say is that, theoretically, there is no reason to 'weight' or to tier adjusted comparables. If all comparable sales have been adjusted appropriately, no one 'adjusted' comparable should be more or less valid than another 'adjusted' comparable. IMO, the need for weighting emerges when the quality and quantity of data are not as good as you'd like, and you end up with a somewhat more 'subjective' analysis. Then qualitative reconciliation is appropriate. In situations where the quality and quantity of data is strong, adjustments are well supported, and the adjusted sales range is relatively tight (whatever that means to individual appraisers), then another approach might be more valid - measures of mode or median for instance.

 

[Mejappz]

I don't disagree. What I would say is that, theoretically, there is no reason to 'weight' or to tier adjusted comparables. If all comparable sales have been adjusted appropriately, no one 'adjusted' comparable should be more or less valid than another 'adjusted' comparable. IMO, the need for weighting emerges when the quality and quantity of data are not as good as you'd like, and you end up with a somewhat more 'subjective' analysis. Then qualitative reconciliation is appropriate. In situations where the quality and quantity of data is strong, adjustments are well supported, and the adjusted sales range is relatively tight (whatever that means to individual appraisers), then another approach might be more valid - measures of mode or median for instance.

Yep, agree with you. But with some clients when I try that, I get hit with a revision request saying to give more weight to one comp or another. We are being told what to do by people who don’t know WTF there doing. Very sad.

 

[alebrewer]

Yep, agree with you. But with some clients when I try that, I get hit with a revision request saying to give more weight to one comp or another. We are being told what to do by people who don’t know WTF there doing. Very sad.

Yep. My point exactly. For instance - you're appraising a unit in a condo complex where you have three model match sales that have all contracted and closed within the past 2 months. How the heck can you weight those comps?? It would be completely arbitrary, which is to say, meaningless.

 

[Mejappz]

I've had the situation happen to me as well. If one sold a few days before the other pick that one and will fly through review. Yes, it's insane and completely illogical, but that what we have to deal with.

 

[Tawfik Ahdab]

We are in charge of appraisal, we are the guardians of it. There is absolutely no excuse for abdicating our role. They push us and they pull us, but It’s up to us to stand firm. We must stand up for ourselves, for the integrity of the profession.

We must have genuine freedom of judgment if we are certifying with every report that we haven’t been unduly influenced.

 

[Michigan CG]

If all comparable sales have been adjusted appropriately, no one 'adjusted' comparable should be more or less valid than another 'adjusted' comparable.......

I am not sure I agree with this. It is my opinion that too many appraisers make completely unsupported adjustments for things like fireplaces, fences, etc. No appraiser can tell me they have matched pairs for a fence and most have no support for their finished basement adjustments.

If we do the job correctly we actually explain (summarize) our adjustments. If I see another $5,000 pole barn adjustment I might shoot myself, twice. If I see another $2,000/acre adjustment for a rural property I might shoot myself three times.

I get to read other people's reports more than most and I have seen maybe a couple decent reconciliations of value, either for the sales comparison approach or the final reconciliation. It is my opinion, based on what I see of other appraisers that most don't tell the reader why the value is $210,000. Now that MIGHT be acceptable for an adjusted range of $205,000-$215,000 but now when the adjusted values are $195,000-$230,000.

I appraised a house earlier this week and here is my Reconciliation of Value:

RECONCILIATION OF VALUE: The unadjusted sales prices range from $221,000 to $229,000 ($125.28/SF to $147.25/SF). Sale #1 is very similar to the subject with a larger land area. Sale #2 is similar with the exception of having a basement. Sale #3 is similar with the exception of having a pole barn. The two pending sales support the sold property's estimated value.

The adjusted sales prices range from $205,000 to $214,000. All three sales are considered similarly as the homes are very similar to the subject.

Considering the above it is my opinion that the subject property value as of April 4, 2020 is at or near $210,000 which is $123.24/SF in the property’s AS-IS condition.

I look at this in hindsight and think it could be better for this relatively easy house. Most appraisers don't tell the reader WHY the opinion of value is the opinion of value. In the commercial world we typically do a SCA and an IA and we HAVE to say why one is more pertinent and why one is given more consideration.

So while I think Xome is a garbage company (formerly Streetlinks if I remember correctly), they are trying to force appraisers to tell the reader WHY the opinion of value is $zzz,zzz and they should expect that as it is required by USPAP.

The problem with many AMCs is that they hire appraisers based only on turn time and fee and many of those appraisers couldn't write a credible reconciliation of value if their life depended on it.

 

[Michigan CG]

If all comparable sales have been adjusted appropriately, no one 'adjusted' comparable should be more or less valid than another 'adjusted' comparable.

Again, I think that many appraisers make adjustments that are not supported. The fence or fireplace or finished basement. I am a minimal adjustment guy. Years ago I read an appraisal of a high-dollar home on Lake Erie and the idiot made a $2,000 adjustment for a half bath for a home with 5 full bathrooms and one half bath.

I have the belief that any adjustment that is less than 2% is not supported as there is too much other noise to make that kind of adjustment. Appraisers are making $1,000 adjustments for patios but not adjusting for the granite counters that had a cost of $8,000.

I think the AMC is correct in their direction to support the opinion of value although telling me how to do it is garbage. Garbage and Xome is interchangable as they want to hire the appraisers who don't know how to write a reconciliation and pay the same fees. They want to hire the cheapest guy/gal and make them understand and write a reconciliation of value when those appraisers have no clue what they are talking about.

 

[Carnivore]

I didn't get past page one of this thread. Why! I din't need to because my Friend Mike Kennedy sourced FNMA Selling Guide.

So a little bit of Editorial: The regulars here at this forum are very good. Ya'll are doing all this already! i know you don't like to be told how to report your results. I don't either. BUT what is being ask here is a trend that I like. Finally Mr Bragadocious is being put in his place, and he no longer can slam bam 2-3 reports a day.

Myself and my friend Ramchk have been completing reviews on Corelogic Appraisers. Most of them suck in report writing. I will say that they are getting to a pretty good opined market value, but I often can't understand how they got there because they Don't Say Jack Chit! The reports are devoid of any comments. Here is one comment I see in almost all of their reports: "These are the Best Comparable Available" That's it folks! The don't say anything in the Summary, they don't reconcile. they do nothing except meet the silly stips, so they won't get stipped.

GH often brings up Client Expectations! He is exactly right.... Guess what Client Expectations are increasing! They are now expecting more than just minimalist reports.

This is a real gift to all of you. This is a paradigm shift. Your now going to be able to compete better with the Appraiser who gets all the FHA On Slab Cookie Cutter Subjects. AMC Phone Monkey now has to actually read your report, versus using a silly checklist that stips you for stupid stuff(wasting everyone's time).

 

[Mike Kennedy]

Yep, agree with you. But with some clients when I try that, I get hit with a revision request saying to give more weight to one comp or another. We are being told what to do by people who don’t know WTF there doing. Very sad.

actually those "people" are parroting Fannie Mae's requirement. (*poster note - variance from "standard" guidelines when necessary and fully explained are acceptable).

 

[Sid Holderly]

A few reviewers are beyond the check-box only analysis. In a rural, small lake and/or small town market getting spot on comps is very uncommon. Addenda pages for divergence, support and analysis methods have thus become a common attachment. If more reviewers would actually read the addenda pages most of their stips would be answered.

I occasionally do a JPMC request, but the fee must reflect the time required to put the analysis (modified for them) where they want it .

I am getting more requests that want specific information in a particular place where I would not normally put it (easier for check-box reviewers).