Richard Carlsen
Elite Member
- Joined
- Jan 15, 2002
- Professional Status
- Licensed Appraiser
- State
- Michigan
We had an interesting exchange with a reviewer at an AMC today. Thought I’d share this with you and see if anybody else has run into this. It may just be because of the way I do things. Here’s how it went.
*****************
(This is the final statement in the Reconciliation section of the report in question)
“Income Approach N/A. Sales Comp Approach and Cost Approach mutually supportive in indicated value range. Sales Comp Approach is given the greatest weight. Lacking a true comp, the weighted adjusted sales price is considered a good indicator of value. Final opinion of value influenced up by good maintenance and additional buildable lot attached.”
*******************
(This is the email we received from the reviewer at the AMC this morning)
“Hi,
In this report, your final appraised value came at $190,000 and you have noted that the sales and cost approach were used; however, the sales approach was $185,400 and the cost approach was $182,135. Please either fix your appraised value or explain what other factors were used to arrive at the final value.
Thank you,”
**********************
(This is Judy’s reply to the reviewer)
“The appraiser is out of the office doing appraisal visits. I will make sure that he gets this email but in the interim I may be of some help. Please note the comments in the final reconciliation that state "Lacking a true comp, the weighted adjusted sales price of all comps is considered a good indicator of value. Final opinion of value is influenced up by good maintenance and additional buildable lot attached". Also please note that the range of adjusted sales prices on the comps is $171,080 to $195,900. The appraiser's opinion of value is within that range.
Again, I will see that the appraiser gets this email as soon as he is back in the office.
Thank you,
Judy Carlsen
Office Manager”
**********************
(This was the reviewers comeback to Judy’s reply. I find the last part especially interesting[underlining mine])
“Hi,
Looking at the comments underneath the grid, I do understand now how the appraised value was reached; however, could you match the appraised value with the sales approach value so the report will be accepted on the secondary market.
Thank you,”
**********************
( And finally, here is my reply to him after visiting 8 properties and 1 glass of Burgundy)
“I was in the field all day today but I think Judy stated our procedure clearly. I think you are wrong in assuming that because in the Sales Comparison Analysis section of the URAR, an Indicated Value by Sales Comparison Approach indicates one value, that the same value must be used for the Opinion of Value. I know of no such Fannie Mae requirement.
On the contrary, Section 417 in Chapter 3 is very clear that in the Final Reconciliation section where I as the appraiser pull together all of the information I have on the property in order to form and state an Opinion of Value, each and all approaches to value must be considered. This section reads as follows:
----
'Section 407 - Final Reconciliation
The reconciliation process that leads to the estimate of market value is an on-going process throughout the appraiser's analysis. In the final reconciliation, the appraiser must reconcile the reasonableness and reliability of each approach to value and the reasonableness and validity of the indicated values and the available data, and then must select and report the approach or approaches that were given the most weight. The final reconciliation must never be an averaging technique.
If the appraiser has provided a comprehensive and logical analysis of the neighborhood and the property, the lender's underwriter should be able to reach a sound conclusion on the adequacy of the property as security for the mortgage.'
----
In the case of the report you question, indeed I took into account the Cost Approach and the Sales Comparison Approach. The Sales Comparison Approach number is actually the weighted adjusted sales price of all comps, entered on this line due to the lack of a true comp from the immediate neighborhood. I also took into account the extraordinary good condition of the property and the fact that the additional lot next door and included has no improvements and therefore can be sold off. It was, and is my conclusion, that the upper end of the indicated sales range of the comps used in this report best represents the subject's value.
If you have secondary market rules that require the Appraisers Estimated Value, as defined, to be the same as the Indicated Value by Sales Comparison Approach, please provide a copy for me.
Until I am provided proof of the secondary market requirement, my report and the values contained therein will remain as is.
Regards
Richard Carlsen”
*************
Anybody else ever run into this problem when your Estimate of Value is different than the Indicated Value by Sales Comparison Approach?
*****************
(This is the final statement in the Reconciliation section of the report in question)
“Income Approach N/A. Sales Comp Approach and Cost Approach mutually supportive in indicated value range. Sales Comp Approach is given the greatest weight. Lacking a true comp, the weighted adjusted sales price is considered a good indicator of value. Final opinion of value influenced up by good maintenance and additional buildable lot attached.”
*******************
(This is the email we received from the reviewer at the AMC this morning)
“Hi,
In this report, your final appraised value came at $190,000 and you have noted that the sales and cost approach were used; however, the sales approach was $185,400 and the cost approach was $182,135. Please either fix your appraised value or explain what other factors were used to arrive at the final value.
Thank you,”
**********************
(This is Judy’s reply to the reviewer)
“The appraiser is out of the office doing appraisal visits. I will make sure that he gets this email but in the interim I may be of some help. Please note the comments in the final reconciliation that state "Lacking a true comp, the weighted adjusted sales price of all comps is considered a good indicator of value. Final opinion of value is influenced up by good maintenance and additional buildable lot attached". Also please note that the range of adjusted sales prices on the comps is $171,080 to $195,900. The appraiser's opinion of value is within that range.
Again, I will see that the appraiser gets this email as soon as he is back in the office.
Thank you,
Judy Carlsen
Office Manager”
**********************
(This was the reviewers comeback to Judy’s reply. I find the last part especially interesting[underlining mine])
“Hi,
Looking at the comments underneath the grid, I do understand now how the appraised value was reached; however, could you match the appraised value with the sales approach value so the report will be accepted on the secondary market.
Thank you,”
**********************
( And finally, here is my reply to him after visiting 8 properties and 1 glass of Burgundy)
“I was in the field all day today but I think Judy stated our procedure clearly. I think you are wrong in assuming that because in the Sales Comparison Analysis section of the URAR, an Indicated Value by Sales Comparison Approach indicates one value, that the same value must be used for the Opinion of Value. I know of no such Fannie Mae requirement.
On the contrary, Section 417 in Chapter 3 is very clear that in the Final Reconciliation section where I as the appraiser pull together all of the information I have on the property in order to form and state an Opinion of Value, each and all approaches to value must be considered. This section reads as follows:
----
'Section 407 - Final Reconciliation
The reconciliation process that leads to the estimate of market value is an on-going process throughout the appraiser's analysis. In the final reconciliation, the appraiser must reconcile the reasonableness and reliability of each approach to value and the reasonableness and validity of the indicated values and the available data, and then must select and report the approach or approaches that were given the most weight. The final reconciliation must never be an averaging technique.
If the appraiser has provided a comprehensive and logical analysis of the neighborhood and the property, the lender's underwriter should be able to reach a sound conclusion on the adequacy of the property as security for the mortgage.'
----
In the case of the report you question, indeed I took into account the Cost Approach and the Sales Comparison Approach. The Sales Comparison Approach number is actually the weighted adjusted sales price of all comps, entered on this line due to the lack of a true comp from the immediate neighborhood. I also took into account the extraordinary good condition of the property and the fact that the additional lot next door and included has no improvements and therefore can be sold off. It was, and is my conclusion, that the upper end of the indicated sales range of the comps used in this report best represents the subject's value.
If you have secondary market rules that require the Appraisers Estimated Value, as defined, to be the same as the Indicated Value by Sales Comparison Approach, please provide a copy for me.
Until I am provided proof of the secondary market requirement, my report and the values contained therein will remain as is.
Regards
Richard Carlsen”
*************
Anybody else ever run into this problem when your Estimate of Value is different than the Indicated Value by Sales Comparison Approach?