Overall Market Trend (Min 12 months)

[Dublin ohio]

Running a curvilinear/3rd order analysis of PPF can also give you the point at which you start to experience diminishing returns. Generally speaking, this wouldn't be something an appraiser would undertake, but might be a great analysis if you're on either end of the market preference for GLA. This kind of analysis might provide support for differing levels of GLA adjustment within the SC analysis.

The amount of time I would have to spend to get a reasonably accurate ppsf analysis would be prohibitive. GLA is probably the most unreliable field in my MLS. Some agents use the auto populate function which is from either county records or Realist. Some counties include below grade finished are in their total finished sf (basements are the norm around here) but the only way you can find out above grade is subtract the below grade finished area. Some counties have a field that show total building area and that gets picked up. Of course there is always the agent that manually enters GLA and who knows where that comes from. Five level splits they always include the lower finished level in GLA and call it 2 stories over a slab.

 

[alebrewer]

The amount of time I would have to spend to get a reasonably accurate ppsf analysis would be prohibitive. GLA is probably the most unreliable field in my MLS. Some agents use the auto populate function which is from either county records or Realist. Some counties include below grade finished are in their total finished sf (basements are the norm around here) but the only way you can find out above grade is subtract the below grade finished area. Some counties have a field that show total building area and that gets picked up. Of course there is always the agent that manually enters GLA and who knows where that comes from. Five level splits they always include the lower finished level in GLA and call it 2 stories over a slab.

To DW's point, I think the data would have to be fairly homogeneous (i.e. control really well for other elements of comparison) for it to have meaning, but the following below is from a condo complex. You can def see the inflection of PPF on the chart at around the ~ 1700' to 1800' range - not so much on the graph, although I think Excel is only doing a 2nd order trend line.

 

[Mejappz]

I’ve been saying this all along: if you consider any of the methods promoted by True Footage and DataMaster, you’re better off relying on checking stable and leaving it at that, especially in markets that are not homogeneous.

 

[Terrel L. Shields]

Generally speaking, this wouldn't be something an appraiser would undertake

The amount of time I would have to spend to get a reasonably accurate ppsf analysis would be prohibitive. GLA is probably the most unreliable field in my MLS.

Exactly. So, the GSEs are happy you charged only $295 less $25 "technology fee" and cannot understand that any serious analysis could take several hours for which you get zero compensation. After all, inspecting a property, pulling comps and photographing them, and writing a report for a typical assignment is likely to take no less than 6 hours in the first place - which is $45/hour before expenses. Add another 4-8 hours and the appraiser is making C store wages.

Does anyone think the GSEs expect fees to rise to at least $800-1000 AS THEY SHOULD BE so that they get a better product? No, they'd rather blame the appraiser for trying to make ends meet on a shoestring budget and chump change from the AMC. If the AMC can charge $1,000 then cut out the middleman. If a community bank can pass thru an appraisal fee to the customer that is exactly what the appraiser charged, then so can every other lender. Just abolish the AMC and force banks to take on this task at their expense. They are charging plenty up front anyway.

 

[J Grant]

To DW's point, I think the data would have to be fairly homogeneous (i.e. control really well for other elements of comparison) for it to have meaning, but the following below is from a condo complex. You can def see the inflection of PPF on the chart at around the ~ 1700' to 1800' range - not so much on the graph, although I think Excel is only doing a 2nd order trend line.

View attachment 96310

I am not arguing with you personally, but for theory debate, what is the point of this? When combining a higher price per sf of smaller units with a lower price per sf of larger units for an average, it ends up never valuing the price per sf of smaller units and valuing the price per sf of larger units.

In addition, price per sf is impacted in condo units by corner or not a corner, view, high floor vs low floor etc.
It makes sense to compare price per sf for 2,000-25000 higher floor units, for example.

A smaller unit that is upgraded sells for more per sf than a larger unit that is not upgraded. There are so many factors that IMO make price per sf a less reliable metric and adjusting for the variables to account for for their influence would be very time-consuming.

 

[alebrewer]

Just abolish the AMC and force banks to take on this task at their expense

10 years ago, I might have believed this was possible. The AMC's of today are run by JV capital, have really deep pockets, are integrally intwined with the GSE's, and have fairly strong lobbies. I do believe, though, that there is mounting pressure to 'cap' the AMC margins.

Then there's the part in bold... AMC's disincentivize lenders from running their own appraisal management groups, as AMC = $0 cost to lender. Appraisal Desk = lots of cost to lender.

 

[alebrewer]

I am not arguing with you personally, but for theory debate, what is the point of this? When combining a higher price per sf of smaller units with a lower price per sf of larger units for an average, it ends up never valuing the price per sf of smaller units and valuing the price per sf of larger units.

In addition, price per sf is impacted in condo units by corner or not a corner, view, high floor vs low floor etc.
It makes sense to compare price per sf for 2,000-25000 higher floor units, for example.

A smaller unit that is upgraded sells for more per sf than a larger unit that is not upgraded. There are so many factors that IMO make price per sf a less reliable metric and adjusting for the variables to account for for their influence would be very time-consuming.

meh - your argument included a lot of words, but no support. The graph I provided clearly shows the point of inflection where diminishing returns become part of the equation.

 

[Terrel L. Shields]

s AMC = $0 cost to lender. Appraisal Desk = lots of cost to lender.

It is not zero cost. The lender still has to have a vendor's list. The lender still usually has a central department where lenders send their appraisal requests to and then on to the AMC. They still have an obligation to vet those reports - AMC or not.

 

[alebrewer]

It is not zero cost. The lender still has to have a vendor's list. The lender still usually has a central department where lenders send their appraisal requests to and then on to the AMC. They still have an obligation to vet those reports - AMC or not.

Mortgage lenders who use strictly AMC's typically manage that relationship through their vendor management group - most smaller ones don't even have an SME on staff - they rely on the AMC relationship for SME needs. The vetting of the reports is typically done in underwriting. So, of course I didn't mean literally 'zero'. I meant its a pass through cost. Which offers the greatest incentive: appraisal cost per loan when using an AMC: $30. Appraisal cost per loan when using an appraisal desk: $250.

 

[TerryRohrer]

Exactly. So, the GSEs are happy you charged only $295 less $25 "technology fee" and cannot understand that any serious analysis could take several hours for which you get zero compensation. After all, inspecting a property, pulling comps and photographing them, and writing a report for a typical assignment is likely to take no less than 6 hours in the first place - which is $45/hour before expenses. Add another 4-8 hours and the appraiser is making C store wages.

Does anyone think the GSEs expect fees to rise to at least $800-1000 AS THEY SHOULD BE so that they get a better product? No, they'd rather blame the appraiser for trying to make ends meet on a shoestring budget and chump change from the AMC. If the AMC can charge $1,000 then cut out the middleman. If a community bank can pass thru an appraisal fee to the customer that is exactly what the appraiser charged, then so can every other lender. Just abolish the AMC and force banks to take on this task at their expense. They are charging plenty up front anyway.

I have never heard anyone claim that origination fees dropped when banks began hiring AMCs in large numbers to take over appraisal ordering and review functions. I suspect there was a very significant windfall during 2008 through today when origination fees remained stable or increased while those costs were reduced at the front end of the period.