market analysis conflicts within report

[Meandering]

Good call MR-this is what a majority of 'appraisers' (lower case a) are stating in their reports daily, why? Because they don't want to go to the trouble of doing a true market analysis.

BTW-the MC form is not really 'crap' if you expand your interpretation of 'Comparable' to include ALL those sales and listings that the mythical typical buyer would have considered in a hypothetical purchase....Would he have considered homes of a different style, but similar size? Would she have considered homes in a nearby bordering and similar town and/or neighborhood? Would they have considered homes in a lower and/or higher price range than that from which they eventually settled upon? Or did they narrow their presumptive search down to 3 BR Ranches built on a slab with a 1 car garage in Mediocresville with a corner lot on the comely cul-de-dac of Primrose Lane????

Oh please.

BTW-the MC form is not really 'crap' if you expand your interpretation of 'Comparable' to include ALL those sales and listings that the mythical typical buyer would have considered in a hypothetical purchase

that's not what the form asks for and you know it.

I am in a rural area, so my market conditions addenda is a standard 5 pages of analysis and includes REO and shorts and Pending sales. I typically cover the township, or a region in the county with multiple municipalities, whatever it takes to get statistically significant data sets. And it covers at least 4 years back. with the most recent year and half broken into quarters and months with statistical trend lines for prices, supply and demand and days on market.

Little check boxes with limited data sets tell you nothing when you are not in an urban area or areas with a large amount of comparable sales in homogenous neighborhoods. Fannie has created this new and exciting form, and then stated that it might not be significant in some markets does not mean you get to expand the scope of the form to make it indicate what you think it should indicate.

.

See the BIG picture.. macro inclusive is more comprehensive than; "There are only 3 sales and 2 listings in the past 12 months that I, your holier than thou market interpretarian have deemed sufficiently comparable to include in my ultra-flawed 1004MC......'analysis' ? Therefore by the power vested in me and based on 5 MLS listings.... I declare the MARKET to be.........(what else) STABLE and...IN BALANCE.....Marketing Times (whatever that means) are Average/Typical and these conclusions are the SAME as I reported them to be in 2007-2008, just before and during the deluge of foreclosures and short sales that caused the largest economic decline since the Great Depression....???? Where is (was) the critical thinking? ... Where is the pride in Profession?...Where is the curious mind?.....Why do we continue to denigrate ourselves by refusing to do a minimal Market Analysis for our appraisal reports????? Is cutting that corner really worth the 5 minutes of time it would take to DO that analysis??? But I digress....70% of all the reports I see include NO MEANINGFUL MARKET ANALYSIS.....YET appraisers universally decry that we are NOT PAID WHAT WE ARE WORTH........Au contraire....most of us are OVERPAID....

Critical thinking should not be done on a check box form. I know you know that. Critical thinking and analysis is done in the addenda, and guess what? Fannie Mae specifically recognizes that and requires it. The flaw is in trying to expand the scope of check boxes and call them "Critical thinking" and even call them "MEANINGFUL MARKET ANALYSIS". I am a CG and therefore write very fluffy Residential reports. As I said my market analysis is a standard 5 pages.

But you can not take one facet of the market, lets say, Price for example and say that the market is declining or increasing or stable based solely on what prices are doing or have done, and wait a minute, might be projected to do based on Pending Sales. Even your silly little forms make you check boxes for Days on the Market and Absorption. But how many just look at the prices and "call the market" based on that limited information alone?

If you want to teach Market Analysis, the CFPB put out a really great read on it. But don't try and swinging thing over some check boxes that were never anything more than a lazy man's mine field.



.

 

[Terrel L. Shields]

BTW-the MC form is not really 'crap' if you expand your interpretation of 'Comparable' to include ALL those sales and listings that the mythical typical buyer would have considered in a hypothetical purchase

If the MC wants 1 yr data and your houses are selling within 90 days or so, the relevance of sales 12 months ago fails me. The important data would be that data from within the exposure time.

 

[gbnumbercruncher]

ctapraser - thanks for responding. It is my understanding of the mc addendum instructions that we are to analyze neighborhood sales. The heading of the mc addendum form states market trends and conditions in the subject neighborhood. I agree with you that looking at the entire market of competing comparables would be more useful, but that is not what is asked for.
Lee - you make a good point about checking the boxes on the mc addendum. Yes I do check the boxes based on what that particular data shows (primarily to avoid call backs and addendums) but follow up in the comments section that the data is too limited to provide indications of trends and I then provide the analysis based on the data that I feel is more applicable. Perhaps instead of checking the boxes and then saying ignore the boxes in the comments, I should just leave them blank.
JGrant - I guess the question remains what exactly is the time frame the neighborhood trends boxes on the form are supposed to reflect. In my current case the market has been up and down, so if the time frame is two years I would have one conclusion, if it were one year it could be a totally different conclusion, if it were three months it might be something totally different. This is not the steady consistent straight line trends shown in our classes and text books that we would all prefer to work with.
Lee - it seems to me that on the mc addendum if the data entered is showing one trend and you check the box indicating a contradictory trend, you are inviting questions, even if it is explained below, as I often receive requests for addendums for things that are already in my report. I think I will try just leaving the boxes blank with a comment about insufficient market data, then show my own analysis based on a more applicable sample. I usually include a graph I can create through the SMART software.
Joyce - I do provide the data from the sample I determine as being applicable.
Marion - The underwriter might be looking at the trends of the county or state overall, but that has no affect on my focus on the trends in my particular market segment (except as perhaps the county or state trends may impact my market segment). Obviously many various market segments buck the county and state trends, so while being informed on the county and state trends, my concern is what is happening in this particular neighborhood and price range. I do like your comments and may incorporate them into my reports. And unfortunately the appraisers I have personally asked about how they are determining market trends and time adjustments have all stated that the market is fluctuating too much so they just call it stable.
Luke - I agree with you that the mc addendum would be more applicable if it were expanded to include competing properties the typical buyer would consider, but that is not what the form asks for. I originally was doing the mc addendum that way to try to make it more meaningful and useful, but the rather arbitrary data points we are forced to focus on, and the fact it just asks for neighborhood sales, I have been unable to glean any useful information from the mc addendum. So I now supply the numbers but explain that no conclusions can be drawn from the limited data, and then provide my own analysis using the perimeters I deem applicable. Apparently many appraisers are dismissing the mc addendum but not following up with a more applicable analysis, instead just stating stable. It drives me crazy that I often spend 20-40 minutes per appraisal analyzing market trends and creating supporting graphs when competing appraisers are skipping the entire process and getting the same fees that I am. My fees are down to approximately $25-$45 per hour on my appraisals, when it used to be double that.
TJ - In my case the market shows decline in values over the three to six month period in which my comps sold, but improving in recent data as prices have started to stabilize and increase, market times are shorter, lp/sp ratios are increasing, list prices are increasing, number of listings are declining as properties get absorbed. Perhaps I am over analyzing the market, or I'm taking too micro a look at the trends as opposed to standing back and looking at the bigger picture. The problem with that would be I could be overlooking a change in the trend which could affect the borrowers ability to borrow as checking declining values will affect the l to v. I have supportable data to show a decline in values from 3-6 months ago (requiring time adjustments to my comps), but also data to show a recent change in the trend, so the neighborhood trend boxes would not match the negative time adjustments I have made in the sales grid. I agree with you that year over year comparison is the most accurate due to strong seasonal variations in my market. I again go back to what is the neighborhood trend specifically referring to? If it is based upon one year or two years worth of data to define the trend, then I would have to check the declining property value box, but that is not indicative of what is happening in the market at this time and perhaps over the past few months as values have stabilized and increased. While historic data trends can be useful, the lenders concern is not with what was happening 18 or 24 months ago, but what is happening most recently and is currently happening with on markets and pendings. I look at the neighborhood trends as answering "how's the market" meaning right now. It is how I would answer the question if a buyer, or a seller, or a lender were to ask me that question on the effective date of the appraisal. Maybe I am looking at this wrong, that since the buyer and lender are most likely in this for the long haul, I have to give more weight to historic trends as useful for predicting future trends and not to focus on the near short term. Okay, my head is hurting now. Thanks for the responses, please let me know if you have any additional thoughts on this.

 

[Artemis Fowl]

ctapraser - thanks for responding. It is my understanding of the mc addendum instructions that we are to analyze neighborhood sales. The heading of the mc addendum form states market trends and conditions in the subject neighborhood. I agree with you that looking at the entire market of competing comparables would be more useful, but that is not what is asked for.
Lee - you make a good point about checking the boxes on the mc addendum. Yes I do check the boxes based on what that particular data shows (primarily to avoid call backs and addendums) but follow up in the comments section that the data is too limited to provide indications of trends and I then provide the analysis based on the data that I feel is more applicable. Perhaps instead of checking the boxes and then saying ignore the boxes in the comments, I should just leave them blank.
JGrant - I guess the question remains what exactly is the time frame the neighborhood trends boxes on the form are supposed to reflect. In my current case the market has been up and down, so if the time frame is two years I would have one conclusion, if it were one year it could be a totally different conclusion, if it were three months it might be something totally different. This is not the steady consistent straight line trends shown in our classes and text books that we would all prefer to work with.
Lee - it seems to me that on the mc addendum if the data entered is showing one trend and you check the box indicating a contradictory trend, you are inviting questions, even if it is explained below, as I often receive requests for addendums for things that are already in my report. I think I will try just leaving the boxes blank with a comment about insufficient market data, then show my own analysis based on a more applicable sample. I usually include a graph I can create through the SMART software.
Joyce - I do provide the data from the sample I determine as being applicable.
Marion - The underwriter might be looking at the trends of the county or state overall, but that has no affect on my focus on the trends in my particular market segment (except as perhaps the county or state trends may impact my market segment). Obviously many various market segments buck the county and state trends, so while being informed on the county and state trends, my concern is what is happening in this particular neighborhood and price range. I do like your comments and may incorporate them into my reports. And unfortunately the appraisers I have personally asked about how they are determining market trends and time adjustments have all stated that the market is fluctuating too much so they just call it stable.
Luke - I agree with you that the mc addendum would be more applicable if it were expanded to include competing properties the typical buyer would consider, but that is not what the form asks for. I originally was doing the mc addendum that way to try to make it more meaningful and useful, but the rather arbitrary data points we are forced to focus on, and the fact it just asks for neighborhood sales, I have been unable to glean any useful information from the mc addendum. So I now supply the numbers but explain that no conclusions can be drawn from the limited data, and then provide my own analysis using the perimeters I deem applicable. Apparently many appraisers are dismissing the mc addendum but not following up with a more applicable analysis, instead just stating stable. It drives me crazy that I often spend 20-40 minutes per appraisal analyzing market trends and creating supporting graphs when competing appraisers are skipping the entire process and getting the same fees that I am. My fees are down to approximately $25-$45 per hour on my appraisals, when it used to be double that.
TJ - In my case the market shows decline in values over the three to six month period in which my comps sold, but improving in recent data as prices have started to stabilize and increase, market times are shorter, lp/sp ratios are increasing, list prices are increasing, number of listings are declining as properties get absorbed. Perhaps I am over analyzing the market, or I'm taking too micro a look at the trends as opposed to standing back and looking at the bigger picture. The problem with that would be I could be overlooking a change in the trend which could affect the borrowers ability to borrow as checking declining values will affect the l to v. I have supportable data to show a decline in values from 3-6 months ago (requiring time adjustments to my comps), but also data to show a recent change in the trend, so the neighborhood trend boxes would not match the negative time adjustments I have made in the sales grid. I agree with you that year over year comparison is the most accurate due to strong seasonal variations in my market. I again go back to what is the neighborhood trend specifically referring to? If it is based upon one year or two years worth of data to define the trend, then I would have to check the declining property value box, but that is not indicative of what is happening in the market at this time and perhaps over the past few months as values have stabilized and increased. While historic data trends can be useful, the lenders concern is not with what was happening 18 or 24 months ago, but what is happening most recently and is currently happening with on markets and pendings. I look at the neighborhood trends as answering "how's the market" meaning right now. It is how I would answer the question if a buyer, or a seller, or a lender were to ask me that question on the effective date of the appraisal. Maybe I am looking at this wrong, that since the buyer and lender are most likely in this for the long haul, I have to give more weight to historic trends as useful for predicting future trends and not to focus on the near short term. Okay, my head is hurting now. Thanks for the responses, please let me know if you have any additional thoughts on this.

My head is hurting too. Please space out your paragraphs...
:new_scrambles:

 

[Artemis Fowl]

I pretty much get around to saying the 1004mc form is garbage after struggling to put it into some kind of context. Then refer to the attached 2 pages of presented analyses.

 

[Metamorphic]

I had the same kind of BS problem last week. The market trends are confusing on the 1004MC, so you do so additional analysis which is also confusing, because.... SURPRISE!!!!!....the market is confusing. And I got a bunch of stips about confusing contradictions in the market data I presented.

I'm coming to the conclusion that less may be more in these situations. Or, conversely, the more you try to explain it the more you'll confuse your reader. Perhaps better to do the bare minimum of the 1004mc. Note that the market trends are not clear and distinct because of shifts in the market trends and motivations appear to be settling the market into a new order that is in conformance with the results of the election and resulting monetary policy, uncertainty with respect to the new healthcare law, prospects for continued high unemployment, and adverse changes in discretionary income as a result of tax law changes. Given all the changes and uncertainty being provided by D. C. over the last quarter its COMPLETELY REASONABLE claim that the market is responding unpredictably to stimulus over and above those that normally drive housing markets and that it will take some time for it to establish a new equilibrium.

 

[liberated]

WELL STATED.

Oh please.


that's not what the form asks for and you know it.

I am in a rural area, so my market conditions addenda is a standard 5 pages of analysis and includes REO and shorts and Pending sales. I typically cover the township, or a region in the county with multiple municipalities, whatever it takes to get statistically significant data sets. And it covers at least 4 years back. with the most recent year and half broken into quarters and months with statistical trend lines for prices, supply and demand and days on market.

Little check boxes with limited data sets tell you nothing when you are not in an urban area or areas with a large amount of comparable sales in homogenous neighborhoods. Fannie has created this new and exciting form, and then stated that it might not be significant in some markets does not mean you get to expand the scope of the form to make it indicate what you think it should indicate.

.


Critical thinking should not be done on a check box form. I know you know that. Critical thinking and analysis is done in the addenda, and guess what? Fannie Mae specifically recognizes that and requires it. The flaw is in trying to expand the scope of check boxes and call them "Critical thinking" and even call them "MEANINGFUL MARKET ANALYSIS". I am a CG and therefore write very fluffy Residential reports. As I said my market analysis is a standard 5 pages.

But you can not take one facet of the market, lets say, Price for example and say that the market is declining or increasing or stable based solely on what prices are doing or have done, and wait a minute, might be projected to do based on Pending Sales. Even your silly little forms make you check boxes for Days on the Market and Absorption. But how many just look at the prices and "call the market" based on that limited information alone?

If you want to teach Market Analysis, the CFPB put out a really great read on it. But don't try and swinging thing over some check boxes that were never anything more than a lazy man's mine field.



.

 

[Meandering]

where you been girl?

 

[residentialguy]

I seldom, if ever, "X" all of the boxes for "overall trend" in the 1004MC because data as to what I identify as COMPS for the subject are usually in short supply in each of the various time-periods and what are there aren't exactly homogeneous. My conclusion is that sparse data are inconclusive for credible support for trend identification.

In such instances--mostly all of the time--I supplement the 1004MC with analysis of other neighborhood data and it is this upon which I rely.

Let me ask: Do you always "X" all of the boxes in the 1004MC? If you do, why?

I see many a 1004MC where the appraiser has dutifully (without thinking, I conclude) X'd each and every box and I am left to wonder what the appraiser is using to support each conclusion.

My last MC had zero data

 

[Lee Lansford]

...

Lee - you make a good point about checking the boxes on the mc addendum. Yes I do check the boxes based on what that particular data shows (primarily to avoid call backs and addendums) but follow up in the comments section that the data is too limited to provide indications of trends and I then provide the analysis based on the data that I feel is more applicable. Perhaps instead of checking the boxes and then saying ignore the boxes in the comments, I should just leave them blank.
...
Lee - it seems to me that on the mc addendum if the data entered is showing one trend and you check the box indicating a contradictory trend, you are inviting questions, even if it is explained below, as I often receive requests for addendums for things that are already in my report. I think I will try just leaving the boxes blank with a comment about insufficient market data, then show my own analysis based on a more applicable sample. ...

Yep.

If the data does not lend support to a credible opinion, why "X" a box as though it does?

Are we "appraisers" or are we "box-checkers"?