JPMC REQUIREMENTS for Reconciliation

[alebrewer]

So just a head's up that, if you do any work for JPMC, they REQUIRE the appraiser to use the 'weighting' approach in the reconciliation of comparable sales. And, while this is an acceptable methodology for reconciliation, it is not the ONLY methodology. IMO, for the client to require the appraiser to adhere to the client's method of reconciliation is an unacceptable SOW, as the appraiser is not the one setting the SOW - the client is. Anyway, below is a revision request an appraiser received. Not telling anyone who, or who not, to engage as clients - just a head's up.

From Xome/JPMC:

The Client requires the appraiser to Include comments reflecting the reconciliation of the adjusted (or indicated) values for the comparable sales and identify why the sale(s) were given the most weight in arriving at the indicated value for the subject property. The indicated value in the Sales Comparison Approach must be within the range of the adjusted sales price of the comparables that are reported in the appraisal report form. Note suggested methods:
* Estimate a percentage for the value given to each comparable sale * Rank the comparable sales from MOST to LEAST weight given and provide a brief explanation why.

 

[Essential1]

FNMA requires a weighting comment. ie comment on which comps you weighted as best reliable indicators and why.

 

[glenn walker]

No big deal there are very many appraisers who do not explain their reconciliation process and when reviewing reports its shocking how many are out of any reasonable range. A weighed average using 5-6 comps can often be a good indicator of how to stay between the lines. The same goes for adjusted sales prices if the appraiser final OMV is either higher or lower than all the sales then its a good indication there is an-outlier or comp that really is not truly comparable to the subject. As far as scope of work you are correct but their engagement letter or guidelines do not conflict with a normal residential scope of work and so I do not see any problem. The bigger issue is estimating what percentage of weight was given to each comp- Yes I can say I placed the most weight on certain sales but to narrow or define it down to a % can be difficult. Anyway as the appraiser you have to determine if you can accept there engagement letter or guidelines because once you accept it you no own it. Personally I have no big issue with it because once you get used to it your reports will fly right past one of their dunderhead reviewers. Otherwise just ask them to remove you from their fee panel or roster.

 

[alebrewer]

I'm not even on their panel. I have issue with it simply because they leave the appraiser no choice on how he/she does their reconciliation. It is up to the appraiser to decide how to perform reconciliation, not the client. Again, though - I don't tell anyone who they should work with - just giving a head's up.

 

[alebrewer]

FNMA requires a weighting comment. ie comment on which comps you weighted as best reliable indicators and why.

Really? I've not seen that requirement in the Fannie Selling Guide?

 

[Tawfik Ahdab]

Percentage allocations and other weight methods can sound really authoritative and may please the reader but they don’t necessarily reflect the thoughts and conclusions of appraisers. Sometimes there is no specific preference for any particular comparable. what do you do then, give them all equal weight according to some arbitrary formula? In fact all these formulations or percentages are arbitrary in themselves to some degree. This is another example of demanding precision without it necessarily being undergirded by accuracy

Again, as Glenn stated, if the scope of work or appraiser independence is so restricted by a client/imposed condition, just follow USPAP and reject the assignment.

 

[alebrewer]

Percentage allocations and other weight methods can sound really authoritative and may please the reader but they don’t necessarily reflect the thoughts and conclusions of appraisers. Sometimes there is no specific preference for any particular comparable. what do you do then, give them all equal weight according to some arbitrary formula? In fact all these formulations or percentages are arbitrary in themselves to some degree. This is another example of demanding precision without it necessarily being undergirded by accuracy

Again, as Glenn stated, if the scope of work or appraiser independence is so restricted by a client/imposed condition, just follow USPAP and reject the assignment.

Couldn't agree with you more - and that was my advice to the appraiser.

 

[Mejappz]

This shows all of us that we have zero control of the scope of work with pre-printed forms and or client imposed requirements. We should hand over our signature and let them complete the report. And yes I know we can decline to do them. That's not the point.

 

[Mike Kennedy]

* Rank the comparable sales from MOST to LEAST weight given and provide a brief explanation why.

Explaining which comparables are more similar and competitive and why - or equal weight and why - standard process to support an OMV. No biggie.

2014
Pg 6 "101 According to Fannie Mae, a property is comparable if the market considers it a competitive 102 substitute. Once a property is determined to be comparable by the appraiser, then appropriate 103 analysis and market adjustments are applied. “Analysis and adjustments to comparable sales 104 must be based on market data for the particular neighborhood and for competing locations – not 105 on predetermined or assumed dollar adjustments. Adjustments must be made without regard for the percentage or amount of the dollar adjustments.”7 107 The key is for the appraiser to adequately explain and support the rationale for using the 108 comparable properties selected in the appraisal report. Such narrative assists in demonstrating 109 the reliability and credibility of the opinion of value. Where the comparable properties possess 110 significant differences from the subject property, additional comparable properties may be 111 included for additional support of the opinion of value. "

Pg 8 "140 When a sales comparison approach requires substantial and varied adjustments, the 141 reconciliation should enable the reader to understand why the sales were used. Adequate 142 reconciliation is a required and integral part of any value conclusion. Standards Rule 1-6(a) of the Uniform Standards of Professional Appraisal Practice8 143 states: “In developing a real property 144 appraisal, an appraiser must reconcile the quality and quantity of data available and analyzed within the approaches used.”9

https://www.appraisalfoundation.org/imis/docs/Valuation_Advisory_4_Identifying_Comparable_Properties_Upated_Final_09262013.pdf

 

[Mike Kennedy]

Really? I've not seen that requirement in the Fannie Selling Guide?

pg 614 https://singlefamily.fanniemae.com/media/21821/display

"Appraiser’s Comments and Indicated Value in the Sales Comparison Approach The appraiser must provide appropriate comment(s) reflecting the logic and reasoning for the adjustments provided, especially for the characteristics reported on the appraisal report form between the Sales or Financing Concessions and the Condition line items. A statement only recognizing that an adjustment has been made is not acceptable. When appropriate, the appraiser’s analysis should also include narrative comments about a current contract, offering, or listing for the subject or comparable sales, current ownership, and recent prior sales or transfers. Additionally, the appraiser’s comments must reflect his or her reconciliation of the adjusted (or indicated) values for the comparable sales and identify why the sale(s) were given the most weight in arriving at the indicated value for the subject property. It should be noted that the indicated value in the Sales Comparison Approach must be within the range of the adjusted sales price of the comparables that are reported in the appraisal report form.