On purchase transactions, can effective date of appraisal be changed from inspection date?

[MMing5000]

For current purchase transactions, the effective date of an appraisal is typically fixed to the date of the appraisal inspection, where the value opinion in the appraisal report is based on the conditions of the property observed on that date.

My question is, when can the effective date of the appraisal be adjusted to a date shortly after the inspection date if necessary, but before the report signature date?

As we are all painfully aware, the real estate market has been dead slow, or at least much slower than anticipated where similar comparables are scarce.

My situation involves a complex appraisal assignment completed over a month ago with an appraisal inspection and effective date of 02/28/2024 and report completion signature date of 03/05/2024.

Having researched and prepared the report in March, i had unknowingly used a comp, which had a closing date of 02/29/2024, which is 1 day after my inspection date which was also the effective date of the appraisal. This comp happens to be the best comp to support value in terms of similarity, recentness of sale and proximity to the subject property, where as the other 3 comps are dated sales that required timing adjustment in a declining market and also location adjustments.

The reviewer had requested me to provide a new comparable with closing date before the effective date of the report. I submitted a revised report by changing the effective date of the report from 02/28/2024 to 03/01/2024, with an explanation that similar luxury comps are very limited and that particular comp is the best value indicator in a changing market.

The reviewer rejected my revision with explanation and said that i can not arbitrarily change the effective date of the appraisal and must provide a new comp.

Short of strangling this reviewer in my mind, how can i offer a rebuttal to let the reviewer know what i think, or how can appease this reviewer to accept the report with the revised effective date which is before the original signature date?


.

 

[David S]

I met a similar situation last month. Due to the recent price jump up, I can't appraisal the subject value at contract price. After I called several pending comps' realtors, I was heard one similar pending comp is sold higher price than subject purchase price and will be closed in a few days late. I called AMC/lender right away and request for extension. On that comp closing date, I do the inspection in the morning and submitted the report late afternoon when I saw MLS turn to sold.

 

[Dublin ohio]

 

[MMing5000]

I met a similar situation last month. Due to the recent price jump up, I can't appraisal the subject value at contract price. After I called several pending comps' realtors, I was heard one similar pending comp is sold higher price than subject purchase price and will be closed in a few days late. I called AMC/lender right away and request for extension. On that comp closing date, I do the inspection in the morning and submitted the report late afternoon when I saw MLS turn to sold.

Excellent suggestion. Thank you!

 

[BRCJR]

For current purchase transactions, the effective date of an appraisal is typically fixed to the date of the appraisal inspection, where the value opinion in the appraisal report is based on the conditions of the property observed on that date.

My question is, when can the effective date of the appraisal be adjusted to a date shortly after the inspection date if necessary, but before the report signature date?

As we are all painfully aware, the real estate market has been dead slow, or at least much slower than anticipated where similar comparables are scarce.

My situation involves a complex appraisal assignment completed over a month ago with an appraisal inspection and effective date of 02/28/2024 and report completion signature date of 03/05/2024.

Having researched and prepared the report in March, i had unknowingly used a comp, which had a closing date of 02/29/2024, which is 1 day after my inspection date which was also the effective date of the appraisal. This comp happens to be the best comp to support value in terms of similarity, recentness of sale and proximity to the subject property, where as the other 3 comps are dated sales that required timing adjustment in a declining market and also location adjustments.

The reviewer had requested me to provide a new comparable with closing date before the effective date of the report. I submitted a revised report by changing the effective date of the report from 02/28/2024 to 03/01/2024, with an explanation that similar luxury comps are very limited and that particular comp is the best value indicator in a changing market.

The reviewer rejected my revision with explanation and said that i can not arbitrarily change the effective date of the appraisal and must provide a new comp.

Short of strangling this reviewer in my mind, how can i offer a rebuttal to let the reviewer know what i think, or how can appease this reviewer to accept the report with the revised effective date which is before the original signature date?


.

If your "new" effective date was after you visited the property (02/28) what happens when it is discovered the dishwasher malfunctioned, leaking water warping the entire kitchen floor while soaking through the ceiling into the basement on February 29? I think what you did is misleading. I think you may hope that reviewer does not send your TWO Appraisal Reports to the state.

 

[Terrel L. Shields]

I inspected a house one morning and submitted the report the next morning (back in the day when you took the paper copy to the lender directly) and he smiled and said, "I just got off the phone with the borrower and that house burned last night." You never know what happens after you leave a property.

 

[J Grant]

one closed sale does not make a value...would you same folks be turning cartwheels to extend dates and change eff dates if the very recent day later sale sold for LESS than the sC price you are trying to hit? Just to be clear about what you are doing and why. I dont' see any price trend long term other than one sale or so as an increasing market. Individual sales, high and low, happen in any market cycle.

Answer, no you can not change the effective date just to make a value work (or for any other reason) It is what it is. Use the sale as a pending as of eff date and explain it closed for X price the day after the effective date and is considered as a value indicator in the reconciliation.. If the UW still wants another sale then go find it - maybe it will support a value and maybe it won;t.

 

[John Hassler]

There is nothing in USPAP that ties the effective date to the inspection date. However, the F/F forms have this hard wired in and without an option to modify so you are stuck on that front.

One possible option is to revise your report to show that post-effective date sale as a pending. In the comments you can note the date it closed and how it factored into your indicated value via the SCA.

 

[Mark K]

Drive by it and do an exterior inspection from the road and use this inspection as your new effective date. Just thinking out loud...

This is likely a battle you won't win w/the reviewer, however.

 

[J Grant]

Drive by it and do an exterior inspection from the road and use this inspection as your new effective date. Just thinking out loud...

This is likely a battle you won't win w/the reviewer, however.

You would then be lying if your report said you did an interior inspection on the effective date. If the order wants an interior inspection, then you can not just plunk in an extra inspection by driving by and changing the date.
Would you be turning cartwheels to change the eff date and fudging if it was an int inspection if the new sale did not support the SC target? I bet not. Why are appraisers willing to risk their license to put their thumb on the scale to hit a price...