Modifying a Recent Appraisal

[jtrotta]

Ray,
I can see your point, but perhaps it's just ME :lol: as I recall (hypothetically) one of the jobs, was over the sale price (lets say-$125,250) and we arrived at (lets say) $130,000 - shipped and was asked to revise and show the sale price of; $125,250* 8O

I believe this is what's meant by "consistency in the industry" :? as I have yet to find any other consistency wihtin the industry :?:

What say yeeee :!:

 

[Pamela Crowley (Florida)]

I have never heard of "consistency in the industry" meaning that an appraisal for a purchase was supposed to hit the contract price.

On the URAR Fannie Mae Form 1004 6-93:

I (WE) ESTIMATE THE MARKET VALUE, AS DEFINED, OF THE REAL PROPERTY THAT IS THE SUBJECT OF THIS REPORT, AS OF _______ (WHICH IS THE DATE OF INSPECTION AND THE EFFECTIVE DATE OF THIS REPORT) TO BE $________.

Then just above the Statement of Limiting Conditions and Appraiser's Certification is the:

DEFINITION OF MARKET VALUE: The most probable price which a property should bring in a competitive and open market ......... (etc)

This definition is the FIRST thing I go into whenever I do a presentation for Realtors or lenders.

Maybe I've missed somewhere that states that the Appraiser is Supposed to meet the obviously predetermined value of the contract price but, I've never seen THAT in writing. (except maybe by a couple of LOs that should be in prison)

 

[Ray Ohler]

Never heard the term. Really. Never heard that term. As for the lenders NOT wanting an appraised value ABOVE the sale price? No idea why. According to regulations they can only lend on the lesser, sale price OR appraised value (of course that's BANKING regulations - these days, there are literally 10,000,000 "programs" out there - really there aren't, but that's what they tell the borrowers). Everything comes down to yield and risk management and greed. All I DO know is if you are looking for MARKET VALUE, Pam recited the definition as defined in YOUR certification - unless you "altered" it. The appraisers job is to develop a market value opinion OR, if you like, to develop an opinion of market value (ask me, says the same thing but we want to be "correct"). As far as delving into WHY a certain piece of property may sell for LESS than market, that is beyond the scope of the appraisal usually. My guess in my example was that there was money "beneath the table" to avoid capital gains (may NOT be right but I really don't care). Hey, they are getting properties here WAY below market - for free - they're STEALING them. It's just not found out in a lot of cases. Like the "gold rush" here.

 

[Ross (CO)]

In reference to Pam's posting about 7 or 8 above me here....right on ! You said same as I would. I have seen it enough times....that some buyers will actually pay more for a property than market value defined by sales, and the adjustments to other comparables would warrant. Some folks get strokes to their ego when they pay "extra", some just have to have the highest-priced home in the neighborhood, whatever it takes. Some are flush with cash and make buying decisions on the fly, with little scrutiny to (market) facts. Some folks even have buyer-agent representation that plays along in the entire scenario, and never really assists the buyer in seeking the appropriate price to offer in the contract. The more, the merrier. The bigger the pie, the bigger the slice for everybody. I really do not care if someone pays extra for a house, and if that price to be paid is $10K, $15K or $20K higher than what my analysis concludes. It is completely o.k. for any lending party to extend themselves beyond what my value conclusion is. They do not NEED the appraiser (and his or her E&O ) to be the one to shoulder the additional burden. Sorry, folks, if they do not provide me the data which I could not find, and allow me to "re-consider" how I missed something to come in at the other (higher) value, then they have every oportunity to seek another opinion of value, and my feelings will not be hurt. Sometimes going down the road of risk means you have to pay for two appraisals, or three, and surely they always have their favorite number-hitter......who will no doubt get whatever assignment comes down the pike next time, because we are not going to mess around with any appraiser who does not give us what we want....how's someone to run a lending business if he cannot find people willing to cooperate.....damn the taxpayer's pocketbook, full speed ahead !

 

[Randy Beigh]

Pamela and Jtrotta

I agree with Pam completely.

I have been in real estate since 1969 and have never heard the term "consistency in the industry" and don't know what it is or means. Even tried looking it up the Dictionary of Real Estate Appraisal and it wasn't there.

Tell me more. What is it and where have you heard it used?

 

[Farm Gal]

Randy:

I too had that phrase thrown at me by a LO/Rep/Someone within the last month on a deal where the appriased value came in GASP above the sale price. It was quoted as if in all caps and sounded like they were reading some SOP
Value was something like $5,000 over a barely over $100,000 deal. I wiped my forehead and said "Thank you for this fish, may I have another?" ...until....about 2 hours after sending the report when we got the "change the value to contract price" call, to which we responded (quite politely) some varient on "Why on earth would you want us to do THAT? Is not everyone Happy about this?". Eventuallly resulted in about 8 phone calls, and (DUH) no change on our end...

Futher and final conversation led to our stating some varient on "Suck eggs and die" or "Fine! Go ahead and GET another appraiser"

First they try to browbeat us into making the number high, now low, what's next??? Crystal ball gazing to achive the perfect number without ever seeing the house or contract or appraisal order???

Oh I forgot we already have those: AVM's!~

 

[Ruth Langkawel]

Go Pam!


I recognize Passion when I see it!

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I think that some have taken offense when I get passionate about an issue. I'm not attacking the person that I'm responding to - I'm just passionate about the issue. Like you are here.

I hope that all can see that, and look at the issue, not the names that happen to be attached to the message. There is a difference between passionately stating your position on an issue, and verbally attacking a person. I see that difference in your post(s).


</span>

Thanks for bringing up this topic. It is a legitimate debatable topic for us. I'm afraid that I agree with Pam on this though. Your value conclusion should be the result of your professional research and analysis - Not the Sales Price. Rubber stamping the sales price or estimated value is the reason that the mortgage industry uses to indicate that appraisals are not necessary, that appraisers merely manipulate the numbers to make the value hit sales price or estimated value.

Yes, I know that giving your honest and professionally developed opinion really p***es off many clients. Some want you to ssssttttrrrrreeeettccchhhh the value. Some want it lowballed. Most want a square peg crammed into a round hole because they make more money on round pegs than square ones.

I also know that flexible persons get more business; and we all gotta live, and support our households.

What do you all think of this as a COMPROMISE:
Include this statement in under Final Reconciliation for appraisals where the client asks you to reduce the value to sales price. "Per client request, the value conclusion reflected is a statement that the value is at least the amount reflected, which may be lower than my opinion of market value." Then, of course, label it as a "Restricted Use Report".

IMO, if the client wants to restrict your reporting, the report must be a Restricted Use Report in order to not be misleading.

That is what I will do with my current conundrum.

 

[Ruth Langkawel]

Go Pam!


I recognize Passion when I see it!

<span style='color:#004c75'>[/color]

I think that some have taken offense when I get passionate about an issue. I'm not attacking the person that I'm responding to - I'm just passionate about the issue. Like you are here.

I hope that all can see that, and look at the issue, not the names that happen to be attached to the message. There is a difference between passionately stating your position on an issue, and verbally attacking a person. I see that difference in your post(s).


</span>

Thanks for bringing up this topic. It is a legitimate debatable topic for us. I'm afraid that I agree with Pam on this though. Your value conclusion should be the result of your professional research and analysis - Not the Sales Price. Rubber stamping the sales price or estimated value is the reason that the mortgage industry uses to indicate that appraisals are not necessary, that appraisers merely manipulate the numbers to make the value hit sales price or estimated value.

Yes, I know that giving your honest and professionally developed opinion really p***es off many clients. Some want you to ssssttttrrrrreeeettccchhhh the value. Some want it lowballed. Most want a square peg crammed into a round hole because they make more money on round pegs than square ones.

I also know that flexible persons get more business; and we all gotta live, and support our households.

What do you all think of this as a COMPROMISE:
Include this statement in under Final Reconciliation for appraisals where the client asks you to reduce the value to sales price. "Per client request, the value conclusion reflected is a statement that the value is at least the amount reflected, which may be lower than my opinion of market value." Then, of course, label it as a "Restricted Use Report".

IMO, if the client wants to restrict your reporting, the report must be a Restricted Use Report in order to not be misleading.

That is what I will do with my current conundrum.

 

[Pamela Crowley (Florida)]

Thank you, Ruth. If I didn't believe that I/we can cause a change for the better, I would have to leave appraising. I LOVE appraising! Finding this forum gave me hope and the courage to fight back when I thought I was almost the only one like me. I understand the cynacism and fight against my own becomming overwhelming sometimes. No, my comments are not personal. I would like them to be a wake up call to action and I absolutely believe that those that do nothing are contributing to the problem. I only somewhat understand the fear of standing up and doing what is right.

Your statement:

What do you all think of this as a COMPROMISE:
Include this statement in under Final Reconciliation for appraisals where the client asks you to reduce the value to sales price. "Per client request, the value conclusion reflected is a statement that the value is at least the amount reflected, which may be lower than my opinion of market value." Then, of course, label it as a "Restricted Use Report".

IMO, if the client wants to restrict your reporting, the report must be a Restricted Use Report in order to not be misleading.

I would only do that in a narrative report form. The Fannie/Freddie forms do not actually allow for this kind of change in the Definition of Market Value and their Statement of Limiting Conditions and Appraiser's Certification. Be careful on this one.

 

[Anonymous]

I hereby nominate Pam for High Goddess of Appraisals.

Seriously, I think we just found our number getter here. Sure is easier on the appraiser to just plug in the number they want. Spend alot less time answering those annoying phone calls about why it is so high, so low etc.

However, in his defense, how is market value defined? As the "most probable price"? Was the home on the market for a reasonable amount of time with adequate exposure? You all know the drill. Perhaps, having a contract in hand with a negotiated contract price, knowing how market value is defined, would you not consider the contract price?


Personally, I would have weighted the comparables based on a top secret formula developed by guys with lots of degrees and letters after their names, then brought the property in for what ever the data indicated, regardless of contract price.