Modifying a Recent Appraisal

[Brad in SAC]

I did an appraisal last December for a purchase transaction, the purchase price was $175,000. The home could have easily been appraised for $185,000 based on market data. I just recieved a call from the broker and the couple who purchased the property are splitting up and one of them is refinancing but they are looking for $180,000 which the home is clearly valued at, even with the comparables I used last December. So, I was wondering the appropriate way to handle this assignment. Do I need to reinspect the property, or do I need to use new comps if I'm going to increase the value? Or can I increase the value, keep the same date and comps and disclose that it was recently purchased for $175K with no additional inspection.

 

[Brad Pack]

For the answer(s) to your question(s):
http://www.appraisalfoundation.org/html/US...OPINION%203.htm

 

[Ray Ohler]

I'm not even going to touch on "updating" or "re-appraising" or whatever. MY question has to do with you representing that the property "could have EASILY appraised for $185,000 last year". MY QUESTION : What did you VALUE it for last year?

 

[Brad in SAC]

Ray

When I did the appraisal last December my range of value was $174,000 on the lower end and about $188,000 on the higher end. The purchase price fell within that range at $175,000 and that was the final estimate of value.

 

[Ray Ohler]

obviously you had some support for valuing it at the "low" end hopefully not ONLY because that's what it was under agreement for. However, bottom line is THAT value was YOUR opinion (of course as of December, 2001, I assume). Now, you can't just change your number keeping the effective date the same. Where is the support? The divorce thing MAY open a can of worms, especially if it is not an "amicable" situation (which everybody may SAY it is but stranger things have happened). Lawyers have been known to say to their clients "We got 'em now. We'll make up for that two months of hell you went through". MY opinion: If you are going to attempt it, do another inspection and see if there is adequate room in appreciation alone to account for a value increase (this assumes of course that you indicated an increasing market and made time adjustments in the first report) using the same comps as in the first report. If you didn't note an "appreciating market" and time adjustments in your first report, leave it alone, bow out. Only two months (assumably) have passed so if you DID make time adjustments, the appreciation rate should be reasonably consistent. This is MY opinion, others may have theirs.

 

[Pamela Crowley (Florida)]

WHY does any appraiser make the bottom line the purchase price when the appraisal indicates it sould be something else?????

IF you didn't have that contract price, what value would you have ended up with???? WHY didn't you just use the value you would have without that contract????

My suggestion: NEVER look at the contract price until AFTER you've completed the appraisal and come up with your own opinion of the market value. If you are above the contract price... SO WHAT! If you are below the contract price... look again at what you did, all the 'whys' of what you did and bring it in where you BELIEVE it belongs with the market data you have that supports it. The hell with the contract price!!!!

ARE YOU AN APPRAISER OR A NUMBERS MAKER? Yes, I am yelling!

Now, if I were you and had done what you did, I would decline this new assignment. You are on dangerous ground no matter what you do now as the appraisal you completed was done to match the contract price. I really hope that you don't get burned by this one. HUGE lesson learned. Decline this new one and become a REAL appraiser from now on.

I do sympathize and understand why you did what you did. Likely, it's what you were taught. It's what I was 'taught'. The only difference now is that I relied more on appraisal books than my in person teachers. We are not circus performers for the loan officers and there is NO ONE in this world that can make me be.

OK.... I'm calmer now. I'll get off this pulpit.

 

[Ray Ohler]

maybe if MORE "reasonably astute and honest" appraisers GOT ON the pulpit we could turn some of the mess around. Then again, maybe not. Worth a shot though. However, we have to do more than just put our names on a petition. As I said before, I saw some appraisals DONE by some of the names on that petition. They weren't ALL victims of predatory lenders. Of course when you open your mouth, you get looked at AND treated like you have a grudge against "successful" business people. Oh well, people will be people.



"No one ever went broke underestimating the taste of the american public"

 

[jtrotta]

Ray & Pam;
Over the years, have done various reports in both good & bad markets; in several cases the estimated value went above the "Sales Price" and on each occassion, the Lender noted the report had to reflect the "Contract Price" and no more.

Perhaps you both could shed some of your experience's on this

 

[Ray Ohler]

SP was $50,000 - my value $80,000. Not a word from the lender. Said in my analysis of the sale agreement that the transaction appeared "arms-length" (which it did), but the agreed upon sale price seemed well-below market (which it was). Over the past 16 years have had quite a few deals which appeared to sell for less than market and no other explanation but that (selling below market - not condition, not a "family" sale or "partners", etc.). Only time I heard problems were from lenders that wanted to sell the loan - not MY problem. Why? Who knows? Oh, I found out subsequently (4 weeks after my report went in) that this particular sale had been part of an estate (supposedly a recent estate). Quite possibly, the estate had an appraiser low-ball it (wonder why they would EVER do that :lol: ?) and now were "selling" it for a lot less than it was worth (wonder why they would EVER do that :lol: ?) don't matter to me, they want to avoid capital gains, let 'em. NOT my problem. The VALUE is what it IS. Pam, your turn.

 

[Robert Dunkle]

Pamela,

Don't hold back now, tell us how you REALLY feel! I agree, it does not matter to me what the contract price is. I actually (kinda) hate for the indicated value to be exactly the contract price as I think it then looks like I "made the numbers".

A true appraiser lets the numbers fall where they will. I just got chewed out by a Realtor because the indicated value was $1,000 below the sales price and I mentioned that the roof sagged over the living room that had a "cathedral ceiling". Her statement was that " if the buyer is willing to pay it, it is worth it!! OK. Just use all of their own money.