Lender wants value lowered based on active listing comps

[Brad Ellis]

Pam,

To answer the original question:

Yes

You just have to stop being so verbose!

Brad

 

[The Warrior Monk]

The development of an opinion of MV involves, among other things, your consideration of closed sales, pending sales, offerings, offerings with contract offers and recent off-market competing properties.

Obviously, each situation is unique. Closed sales ("the comps") by themselves may not be a reliable indicator of MV.

Ditto.

If one only uses closed sales in their market analysis, they are only looking at part of the picture.

 

[MMCHNY]

Bracketing was one of the revisions the UW required when they asked for the income & rental forms to be included. My gut feeling is the MB was trying to do some "creative financing" of some sort. Why else would the appraisal order specify single family cash out refi, then ask us to remove the order from the appraisal and then the UW requests income and rental forms. The borrowers parents live in the home, there is no rental or income involved. My supervisor did not inspect the property with me and I checked the appropriate boxes on the appraisal. They just requested him to inspect the property. The MB told him not to "disturb" the parents and do an exterior only. Again they mentioned calling the Appraisal Board. I agree that the lender probably doesn't want to do the loan and both UW and MB are looking to blame the appraiser.

 

[RSW]

Question:

Were your listings listed above or below your appraised value?

If they are listed below your appraised value,then the UW is looking at the principal of substitution. It may appear that values are declining. Are your listings similar in size to your subject or are they smaller?

 

[Tom Woolford]

MMCHNY:

I have had several assignments lately where I weighed the value on the listings because the immediate market was tanking so bad. Reconcile your value as of the date of appraisal, with the best data available. A closed sale is nice, but if its 3 months old, around here that could mean being 5% off. The underwriter in this case appears to be protecting his employer. Refreshing for a change.

 

[MMCHNY]

They were listed above subject value. After adjustments and minus list to sale price ratio they came in below subject value. Subject is 1,956 s.f. Listings are 1,819 & 1,922 s.f., similar to subject and in subject neighborhood.

 

[RSW]

They were listed above subject value. After adjustments and minus list to sale price ratio they came in below subject value. Subject is 1,956 s.f. Listings are 1,819 & 1,922 s.f., similar to subject and in subject neighborhood.

Looks like they should be ok. Did you make any type of an adjustment to reflect a current sale that would have lowed the adjusted value for the listing?

 

[MMCHNY]

RSW

No I did not. I deducted the list to sale price ratio off the listing price which is what the UW stipulated. This brought the adjusted value of the listing in $10,000 below subject value. I re-evaluated the data as the UW requested and lowered the subject value by $10,000. and sent the report back. I'll have to wait and see if they accept it.

 

[Mike Garrett RAA]

People in hell want ice water too! Your opinion of value should be based on closed sales...not listings.

 

[Esox]

People in hell want ice water too! Your opinion of value should be based on closed sales...not listings.

I agree. If lenders essentially want a forecasting adjustment, they should change the form and make it more similar to the ERC form. They should also ask for a value based on a specific marketing period. That is a different appraisal mind set. I have been getting requests for proximate current listings. In some cases the proximate current listings are much higher and not always similar or in my opinion relevant. However, if I include a listing that is more similar but farther away, they come back and ask for something more proximate. Stupid.

I've yet to become comfortable with listings in the sales grid. I do it when I have no choice. Granted they are indicators of market conditions. I feel it is more appropriate to discuss listing trends in the narrative sections of the report.

I think the current 1004 is not properly set up for a gridded analysis of listings. I do not adjust them for list to sale price ratios because it is common in my market for properties to initially be listed high and then end up reduced. In most market segments in my area, the market has not experienced brutal declines, so optimism by sellers and listing agents is still the norm at the start of a listing. I also believe we are seeing a slight upturn in the market. Does that mean I should "forecast" with a positive adjustment?

If lenders want listings gridded, they should have a separate listing grid in the report. Then we could all raise our fees about 75% to the relo fee ballpark.

Kevin