Misguided Reviewer?

[Mike Garrett RAA]

I agree with Roger. Your cost approach would generally set the upper limit of value on the principle of substitution. The sales comparason analysis indicates a value range with the high end of the range being, say, $185,000. There is no income approach indicated.

The underwriter is following Fannie Mae underwriting guidelines. I would recommend you lower your value conclusion OR find more suitable comparables to support your value conclusion.

On rare occassions I have gone above both value estimates by giving consideration to the present contract on the subject property as a fourth comp (what a willing, knowledgable, prudent buyer would pay when not acting under duress). Usually that is a minimum dollar amount such as $1,000 or less. Suppose my cost came in at $185,000 and the sales comparison approach came in at $185,000 but the contract was $185,500. I would then raise my final value conclusion to $185,500.

Remember that underwriters are normally not appraisers (I think they should be...at least licensed). They are given a set of guidelines to follow and do just that. You might win the battle but lose the war in this case.

 

[Richard J. Glesser]

Leaning toward the underwriter on this one. If condition and additional lot were factors in raising the value, I don't understand why they weren't included in the report and adjusted, thereby giving you a sales approach value in line with your final reconciled value. I have used similar arguments that subject lies at upper end of value based upon extremely good condition and additional lot to place the final value of the market approach at the top end of the indicated range.

Unless some approach to value correlates with your final value, a question will always remain as to how the final value was reached. As previously stated, it is also our obligation to complete the report in an understandable means for the reader. I believe the answer lies in proper adjustments of all the variances within the market approach which eliminates the conflict. :usa:

 

[Richard Carlsen]

Follow up...

Received a nice email from the chief reviewer (Cert Res appraiser) regarding this issue.

I responded with my logic and how I do things. But at the end of the note, told him that in order to expedite his loan process for his client and their customer, I would change the Indicated Value by the Sales Data Approach to be the same as my Final Estimate of Value. Made the changes including changing my comments and sent the report off.

Received another nice email from the chief reviewer after sending in the newly corrected report.

My conclusion, mainly after reading the various posts, was that this is really no big deal and not worth a line in the sand. Besides, there are too many reports to write to spend time slugging it out on what is almost a philosophical dispute.

Thanks for all of your input.

 

[Carnivore]

Richard,

FTR, I was on your side for the point made by you.

Were you right or wrong, dont know, dont care, I have respect for your judgement as demostrated by the license you hold.

Its tough dealing with the phone monkees. they simply donot have the training, nor the qualifications to be telling me, you and any other licensed/certified appraiser out here in the trenches how to do our job.

Great point, Thanks for doing your part in regaining control of our profession.

I am with you 100%

 

[Bill_FL]

I also would tend to agree with the reviewer. By supplying to approaches to value that are both below the reconciled opinion of value, you have not supoprted your opinion.

As a rule of thumb, the final opinion of value should be "bracketed" by the approaches completed in order to support that opinion. Just as one should bracket sales in the sales comparison approach.

 

[Rich Hahn]

OK
My question is..
were you really in the field?

 

[Ben Vukicevich SRA]

Wow,

How did they let slide a subdivided, buildable lot into the value??? Fannie's not gonna be happy...it's that excess land theory.

Ben

 

[KD247]

Wow, and I thought I was a rabble rouser. I think you've earned the title of "Passive-Aggressive Appraiser of the Month".

My next step would have been to at least include the subject as an additional comparable, but you went all the way and employed the seldom used fourth alternative, the "Current Contract on the Subject Approach to Value".

My hat's off to you.

Koert

(p.s. Be sure and double-check that the GLA isn't 500 sf too big and that you've included the third level in the GLA.)

 

[Richard Carlsen]

Rich;

Yes I was "in the field" that day but not last night. Last evening I was in the river with a local broker from 7 until 11:30PM. Beautiful evening and night. When the moon came up with Mars just to the south so big and bright, it was a lovely sight.

***

One of the interesting things about this house was that it was not an appraisal for a sale but a refi. The owners had already closed on a CASH purchase from a FSBO at the end of June. Their sale price was $8,000 higher (+4.2%) than my appraised amount. My appraisal had nothing to do with the sale.

Anyway, as I said, with things slowing down a little and this not being a "biggie", now is not the time to tick off a client. So I simply pulled in my horns and will live to fish another day (or night).