New USPAP Q&As published March 6, 2025

[glenn walker]

True story when we owned rral estate offices and a small appraisal shop in another office suite we used to have a few local real estate business attorneys come every 6 months to our main office meeting. On the discussion of valuations and residential appraisals when asked whats the lowest legal liability and risk on values? He sheepishly said the easiest appraisal to defend is the one that comes in at purchase contract ..ie sales price. That's because we have a buyer a seller normally a listing and selling broker and finally a lender who signed off and funded it. Therefore its difficult to say the appraser over or under valued it. I found this to be true and in a career that started in 1979 at 23 years old as broker and appraiser we never had any appraiser or realtor sued on a transaction or appraisal at SP or Contract Value.

All our legal nightmares were always on one's when the appraser came in lower and often both buyers and seller's and lender were out to get the appraser.

The Skippy therefore often has the longest career and makes the most money because he always comes in on Contract Price and everyone in the transaction loves him.

I'm not saying this is right I'm just being the honest oncologist who tells you I'm sorry but it's terminal and i can't help you.

 

[TerryRohrer]

True story when we owned rral estate offices and a small appraisal shop in another office suite we used to have a few local real estate business attorneys come every 6 months to our main office meeting. On the discussion of valuations and residential appraisals when asked whats the lowest legal liability and risk on values? He sheepishly said the easiest appraisal to defend is the one that comes in at purchase contract ..ie sales price. That's because we have a buyer a seller normally a listing and selling broker and finally a lender who signed off and funded it. Therefore its difficult to say the appraser over or under valued it. I found this to be true and in a career that started in 1979 at 23 years old as broker and appraiser we never had any appraiser or realtor sued on a transaction or appraisal at SP or Contract Value.

All our legal nightmares were always on one's when the appraser came in lower and often both buyers and seller's and lender were out to get the appraser.

The Skippy therefore often has the longest career and makes the most money because he always comes in on Contract Price and everyone in the transaction loves him.

I'm not saying this is right I'm just being the honest oncologist who tells you I'm sorry but it's terminal and i can't help you.

Were any reports produced where the opinion of value came in below the contract price?

 

[NC Appraising]

True story when we owned rral estate offices and a small appraisal shop in another office suite we used to have a few local real estate business attorneys come every 6 months to our main office meeting. On the discussion of valuations and residential appraisals when asked whats the lowest legal liability and risk on values? He sheepishly said the easiest appraisal to defend is the one that comes in at purchase contract ..ie sales price. That's because we have a buyer a seller normally a listing and selling broker and finally a lender who signed off and funded it. Therefore its difficult to say the appraser over or under valued it. I found this to be true and in a career that started in 1979 at 23 years old as broker and appraiser we never had any appraiser or realtor sued on a transaction or appraisal at SP or Contract Value.

All our legal nightmares were always on one's when the appraser came in lower and often both buyers and seller's and lender were out to get the appraser.

The Skippy therefore often has the longest career and makes the most money because he always comes in on Contract Price and everyone in the transaction loves him.

I'm not saying this is right I'm just being the honest oncologist who tells you I'm sorry but it's terminal and i can't help you.

100% agree.

When was the last time a re agent or the borrower sent an appraiser to the board for meeting the needed price for a refi or a purchase.

There are several lenders in my market that I know of that uses nothing but price hitters. It's strange, every market bubble they seem to rise to the top. Coincidence, I think not.

I totally understand why appraisers leave things out and do not make adjustments....

As soon as you start making adjustments...and noting things...it all goes down hill. The rejection risk goes up by 75%. It's a cat and mouse...

The numbers hitters have it down to a science. Make minimal adjustments, note no external issues, note no issues with the home, make the predominate the appraised value, add 50 comps sales on top of page 2, bracket everything. Use a team to get it back in two days.

It gets through the uw, AMC and the gses checker.

 

[Joe Flacco]

Fact is, most of the time the contract is indicative of market value. No one really cares how it gets there except for us.

 

[glenn walker]

Were any reports produced where the opinion of value came in below the contract price?

I'm guessing about 95% or more came in at contract price..extremely few below but those were usually small numbers. If one came in 5% low we usually expected a problem so no surprise and warned the buyer and seller that we had no comps and nobody was mad at the appraser.

I believe Fannie last year reported about the same percentages As Ii recall they said 95% on contract price. Danny Wiley could maybe update the forum I'm sure Freddy Mac is the same or similar.

 

[Fernando]

Most purchases are at market value. It's up to the appraiser to determine if the transaction is arms length and even if so, if the price was better for seller or buyer.
That's what client wants to know.

 

[Mike Ault]

I'm guessing about 95% or more came in at contract price..extremely few below but those were usually small numbers. If one came in 5% low we usually expected a problem so no surprise and warned the buyer and seller that we had no comps and nobody was mad at the appraser.

I believe Fannie last year reported about the same percentages As Ii recall they said 95% on contract price. Danny Wiley could maybe update the forum I'm sure Freddy Mac is the same or similar.

99% of the transactions at Walmart occur without shoplifting because everyone knows there are measures in place to discover and punish the crime. Take those away, and guess what happens.

 

[Non Sequitur]

99% of the transactions at Walmart occur without shoplifting because everyone knows there are measures in place to discover and punish the crime. Take those away, and guess what happens.

Great analogy.

 

[CGinMN]

When there are no appraisers to validate the reasonableness on the majority of purchase transactions, it will go something like this (already does to a degree)…

Real Estate Agent: Can you check to see if you can us a waiver at $410,000? Need to know how much we can offer.

Loan officer: Yes, waiver hit.

Agent: Awesome! I know this is crazy, but can you try $450,000? It’s competitive right now and I don’t want our customer to lose out on this one.

Loan officer: Yes, waiver hit.

Agent: Can you try $460,000? They can put down a little more if they need to.

And so on… rather than market fundamentals, in a competitive market it is AVM value plus borrower credit and LTV that determine the contract price.

Then Fannie will figure out, as long as the LTV is under 80, why not tweak the waiver algorithm to allow some variation on value (5%). The AVM is imperfect, right? There’s no such thing as a point value. As long as borrowers has strong credit and good downpayment, what is the risk? This allows them to pick up market share against Freddie which means a fat quarterly bonus check. Until Freddie responds, and then it’s just a race to the bottom.

 

[Sadie]

.......
The survey method a recognized appraisal technique based on re agents experiance, thoughts and personal experiences.

But the appraisers experiance is worth nothing.

I know why......it is what it is, just find it a Lil hypocritical.

Skippy screws up everything.

Its more of when you need an adjustment rather than support, Experience counts for a lot in the decision making process. USPAP has always has the requirement that you use recognized methods and techniques. Experience does not fit that definition. Also each person's experience is is unique to the individual so there is no way for a user to logically arrive at the same result as you. Its basically saying "because I said so" as an support for an adjustment or a lack of one.