Picking Comps

[maryjo313]

Comps

And what's most suspicious to me about this appraisal isn't even the short sale; while I disagree with it playing so much a part in the value, it at least is in the same neighborhood.

What really sticks out like a sore thumb is the #4 comp. When I pulled it up to see exactly where it is, it's in a completely different city, further away from everything. It's what we'd consider "out in the country" from where I am looking, further away from the main highways, certainly further from the majority of the employment areas, shopping, colleges, etc. So yeah, the prices out there look to run about $10-15K less on average than the location my house is in. It's not that recent (6 months old), and there's easily 5-6 better comps he could have chosen, if I expand my search to 2 miles out. I just don't see any logical reason why it was chosen.

 

[TxArmadillo]

Okay, let's recap what we've come to realize so far:

...Thanks to the appraiser's training and experience and diligence you are now more informed about what it is you're really buying as well as how it stacks up against the 3 closed sales in your neighborhood. Thanks to his personal efforts your seller has apparently already agreed to a $13k price reduction (and they should count themselves lucky he found their error before it was too late).

George, thanks for being one of the good folks that doesn't immediately throw the appaiser under the bus because someone from the General Population has a disagreement.

 

[TRESinc]

it seems that all you want is someone to agree with you that an appraisal that no one but you has seen is incorrect. you basically have said that everyone (you, your agent, the lender) is right and the appraiser is wrong despite what everyone here has told you.

what exactly did you expect to happen? you don't go to pittsburgh and ask them about how great the browns or ravens are doing this year. we, as professionals, will do our best to help you but when you disagree with just about everything we say there is not much that can be done.

 

[maryjo313]

Size of comps

Your realtors comment about not using homes with 500 sq. feet of diffrence from the subject is bogus. We try and utilize the most similar comps possible but we have to work with the data that is available.

I never said it was inappropriate for an appraiser to use a comp of that size. My realtor's ethics were being questioned for not using these smaller homes as comps, and so I answered as to why she did not. There were plenty of comps closer in size from the previous 3 months of sales nearby to the sqft we thought the home was. Those were the ones she used. I cannot predict the past and what she would have done working off the same size that the appraiser was working off of.

 

[George Hatch]

Lookit, if you're here in search of validation for an opinion you already have then you've come to the wrong place. We don't do that. Realty agents will hold your hand and tell you what you want to hear- it's part of their job description and is a very necessary function with respect to the role they serve.

As appraisers we really don't care what you or anyone else wants to hear. That's not part of our job description. In fact, we certify that we don't care what you or anyone else in the transaction wants in every report we sign. That's not idle talk, either. We're not supposed to care. That's what makes an appraisal usable. If the lenders cared what their borrowers or the brokers thought about value they'd never even get an appraisal from an outside third party. Think about it.

We're just here to observe and report, hopefully with as much dispassion and disinterest in the results as we can muster. We don't make loan decisions and we're not on anyone's team, least of all yours'. In our business, being called a "team player" is a grave insult. Fighting words.

I already qualified my remarks about both the appraiser's work and the broker's work with some pretty prominent "if/then" statements. Perhaps you missed them.

Just from what you've said so far I can identify at least 2 problems with the appraisal report, neither being particularly serious. One is the inclusion of a distant S#4 that makes no sense within the context of the other more proximate sales. I don't know why the appraiser did that but I do wonder if perhaps they were attempting to "help" you and should therefore be criticized on that basis. My other complaint is that the appraiser apparently failed to mention that S#3 is also very local. That's not a big omission but it is an apparent mistake so it is what it is.

The "unlivable condition" of S#1 might also be a mistake if that is actually the case. That's almost never the case with a short sale so there would be no reason for any of us to assume that from your prior posts but anything is possible. You never mentioned it before now so that makes me wonder when you found that out and from where.

The presence of other nearby sales makes me question why they weren't used in the appraisal. Maybe there's a good reason for that and maybe there isn't. I guess it just depends on how similar they are in age, condition, design and appeal. If I'm appraising a home that was build in, say, 1988 then I don't consider a 2000yb or 2012yb home to be a direct comparable, regardless of the physical condition of my subject.

At any rate, it looks like you've learned a thing or two about what we do that you didn't know when you came here so that's good. It looks like the appraiser's efforts to identify the correct size of the house have remedied a problem you didn't previously even realize you had so that's good. If nothing else you're now better informed about this situation than when you showed up. Armed with this additional info, if you still feel like the $212k is a great deal for you then I sincerely hope you are successful in attaining your desires. The whole point of building appraisal reports is to provide people with the information it takes to make an informed decision.

 

[Mr Rex]

The number one reason that appraisers in NC are subject to disciplinary action is from jumping outside the subject's immediate neighborhood to others to help inflate a value. I haven't read all the posts, but from what I glean, the appraiser used comps from your neighborhood but they were smaller. My first inclination is that your house is one of the larger homes in the neighborhood, and may suffer from some degree of over-improvement, as typically the largest houses in the neighborhood do suffer some value wise, versus nearby neighborhoods, where the larger GLA is predominate. FWIW, I'm not far from you and familiar with the Wake Forest market.

 

[maryjo313]

it seems that all you want is someone to agree with you that an appraisal that no one but you has seen is incorrect. you basically have said that everyone (you, your agent, the lender) is right and the appraiser is wrong despite what everyone here has told you.

Actually, no, there have been several comments here about the appraisal appearing to be suspect.

"The appraiser does not know how to do a cost approach"

"Seems you have a classic "suspect" appraisal "

i
what exactly did you expect to happen? you don't go to pittsburgh and ask them about how great the browns or ravens are doing this year. we, as professionals, will do our best to help you but when you disagree with just about everything we say there is not much that can be done.

I haven't "disagreed with everything you say" I just disagree with your unflinching defense of an appraiser you don't know personally, and I really disagree with the attacks against my realtor. My original question was how do I best approach the situation to have some shot to get the appraisal adjusted to something more in line with the market and such that I would still be able to purchase the home. Because quite simply there is ZERO chance of buying this home with the appraisal we got. I appreciate all the information what goes into choosing the comps and setting the value, and I get that you want to defend someone in your profession, but ultimately it still lives me in an untenable position. Seriously, you think there is NEVER an appraiser that does a poor job and that a buyer should 100% trust them no matter what data is there that says the appraisal could be incorrect?

At least I did get some suggestions and do have a plan to try and move forward. I see no reason to continue debating on here though since clearly anything I say to defend my realtor, etc. will just get torn apart in defense of the appraiser. I did not know this was such an "us versus them" type of situation and it's a shame that it has to be that way frankly. I've done my best to answer the questions on here honestly as to why we think the appraisal is incorrect, but it's clear that nothing I'd ever say would satisfy you, so not much point in continuing. We are satisfied that we have the right price set and assuming the sellers want to continue working with us, will see how things go with trying to appeal the appraisal and move forward. I wish I'd been able to get some help in how best to approach composing such an appeal but seems that's not going to happen so we'll just do the best we can.

I thank you for your time regardless, it's been educational.

 

[George Hatch]

I never said it was inappropriate for an appraiser to use a comp of that size. My realtor's ethics were being questioned for not using these smaller homes as comps, and so I answered as to why she did not. There were plenty of comps closer in size from the previous 3 months of sales nearby to the sqft we thought the home was. Those were the ones she used. I cannot predict the past and what she would have done working off the same size that the appraiser was working off of.

I need you to go back and read what I actually said, hopefully without the emotional baggage.

As appraisers we look at readily avoidable errors as having one or two causes - either the person made a mistake as a result of not knowing any better in that situation (competency) or they did know better but made the mistake anyway (ethics). If you think about it on a conceptual basis there isn't any third alternative when it comes to a readily avoidable error. Really, you can apply that same rationale to all sorts of other endeavors outside of appraising, too; most probably including your own occupation or role in your family.


From our perspective it doesn't make much difference which of the two it is because the results are the same.

In your prior comment you mentioned that your broker told you she "wasn't trained" to identify all the sales that were actually used in this appraisal report. Assuming that "wasn't trained"' is the accurate explanation - which I don't have any reason to doubt - then it very neatly fits under the "competence" column.

Moreover, you need to understand that it's not a derogatory thing for an appraiser to say that the realty agents are incompetent to do what we do or even render a judgement on what we do. Nor is it a bad thing for a realty agent to say that appraisers are incompetent when it comes to helping you buy or sell a property.

That's because there isn't nearly as much overlap between our respective roles as people often think. We even define the term 'market value" differently than they do, the difference being entirely attributable to the different roles we play. Again, not an insult but simply a fact.

I've been appraising for over 27 years now and I can count on one hand the number of times a realty agent has handed me a list of comparable sales data that significantly matched my own list. They're simply not trained to do it, and if they're telling you they are then you need to take that comment with a grain of salt.

 

[maryjo313]

I was never really looking for "validation of an opinion" but I kept getting asked questions to try and justify what my opinion *was* and why I had that opinion, so I guess that's how it ended up coming out. I guess my mistake was in answering those questions rather than just taking it all in. I just wanted some help to understand why the comps were chosen this way when there seemed to be better ones, and some idea of what if any options I had to possibly make the sale still work, knowing that the low appraisal simply made it impossible to go forward. I understand now that there's simply no way anyone on here could know why the appraiser picked the ones he did, so I guess that was an unreasonable hope.

Regardless, it's all moot at this point. The seller still refuses to meet what we feel is a very reasonable offer given the size being wrong, and the comps in the area. When we asked to see the comps the seller's agent was using, she sent us ones that included some even more than 18 months out. We know there's an additional foreclosure that just sold, and another that appears set to close at the end of the month, and they won't extend the due diligence either. Basically they get $500 cash from my due diligence and put the home on the market again, to roll the dice with another buyer, and I've lost quite a large sum of cash put in so far. Pretty much sucks, but I am very grateful that the appraiser found this size issue that definitely resulted in the home being over-priced and would have been a problem for me in the future if discovered when I went to buy. I guess we'll be measuring any house I decide to bid on in the future.

 

[AnonApprsr]

It boggles my mind that a buyer gets upset when an appraisal comes in less than the sale price. Use it as a negotiating tool, go to a different lender if they won't get another appraisal after you renegotiate the P&S. In most markets you should be able to do this.