"Playing" Appraiser

[Tim Hicks (Texas)]

To add to Barbara's comment: I did a review on a $700,000 appraisal. The value was weakly supported by three comps. Sale#4 was a pending sale and it was listed for $799.000. In our area, the realtor will not disclose a contract price until it is closed and put on the MLS. Silly, but unless you personally know the Realtor they will not tell you until after closing. Well, after the fact and under review the 4th sale closed for $675,000. Well, below the typical drop from list price, but right in line with comps #1-3. A property is not always listed competitively!

 

[Brad Pack]

Brad,

Well put! However, the Principle of Substitution is fundamental to all three approaches to value.

FYI- The former Santa Ana field office required that we not use more than 3 comparable sales in a report. They felt that additional comparables were "redundant". In some cases that may be true, but I always felt that should be left up to the appraiser to decide. I'm glad that requirement has been retired.

Brad

 

[Terrel L. Shields]

I am only asked for 4th comps on log homes, A-frames, etc. When an UW wants a 4th comp, I tell them that I figured they would so I saved back the best comp for the 4th comp....Please drop a check for $100 in the mail and I will send the 4th comp right over as soon as it clears the bank.

Ter

 

[Craig in Oregon]

RE: Brad Ellis example of attorney/CPA/Certified appraiser using 27 comps; any bets the fee was billed on a PER MINUTE basis?
I also add $$ for extra comps if at all possible.
The most recent 4th comp event was so strange: the mortgage broker had a ultimatum from secondary lender for 4th (or "just one more") comps for ALL appraisals in a portfolio of $16 million in loans and to deliver in 5 biz days or the loan(s) would not be bought. I had already been paid so couldn't add on $$. Did it as a favor to a decent client, already had the photo and MLS page in file. Sent PDF, quick and dirty but supportive as the value was certainly there.

 

[airphoto]

My two pennies ..

Provided our local "Fools of Assessment Review" with 53 land comparables .. they, of course, denied the valuation but weren't able to check their usual box that says "you failed to provide adequate documentation."

Their reasoning? And I quote: "From all the 'comparables' you provided us, we couldn't tell which ones were comparable!"

People wonder why I have no respect for these idiots!

 

[Larry Lyke]

Since I've switched to Athena last summer, I've altered my handling of extra comps (which I've never been asked to submit, but don't want to discard this fully processed information).

Every appraisal I do has a minimum of 4 comps fully processed, usually 5. I simply photo and grid this many as being acceptable, and then pick the best 3 to allow them to go through the system to the client.

After the appraisal is fully worked up and I've seen the comps' logarithimic program figures too, I pick the 3 I intend to use. Then I give the appraisal a new unique name and discard the "extra" comps I didn't "choose to use." That way, within 3 minutes I could send another comp down the pipeline to the UW -- but I wouldn't do that. I would wait at least 2 days minimum.

BUT THE IMPORTANT POINT IS that I can always be assured any comps after #3 will never be better than those already submitted. This is very important. If you start submitting better comps after the original ones, when do you think the UW will quit asking you to submit additional comps -- at #19 -- #27 ?!!

 

[Pamela Crowley (Florida)]

I'll add a 4th comp when it helps bracket an oddball. I'll add a 4th, 5th or even a 6th when I'm being pressured for a value and that is the only reason the additional comps are there. Doesn't anybody else use additional comps for this reason? If I'm asked for more than what I've already used, I charge $50 - $100 each, depending upon who the client is.

Had a FHA about 6 weeks ago that went in with 6 comps. The LO and then his boss wanted other comps to make the value wanted. "No." When the Realtor called to see if she could make me change my mind and up the value using other comps I could very simply tell her the addresses of what I used and that if she had any others that were newer, nearer and more similar, to please send them to me to consider. Never heard from her again. Those six were about all the sales available in that small town.

I also like to use the additional comps page to put 4 - 6 up on grid, print the additional comp page for my file and send in the report with just the 3 best. Additional comps are in the file if needed which is very rare.

 

[Tim Hicks (Texas)]

I use a 4th and 5th comp all the time. If the house next door or across the street closed within the last year, but not the last six months, I add it because it usually is pertinent to the appraisal. I will then add an additional comp within the six month time frame, just so I will not be asked to provide another comp within six months. If it is a rural property, I will use up to six comps. It seems you never have comps on the same acreage and if you do the home is 500 SF bigger or smaller, so I add additional comps to support the adjustments I have made on the first three. Sometimes there are no decent comps and nothing you have will satisfy the underwriter. They rarely trust our good judgment, they would rather see it in black and white. Sometimes, three comps just are not sufficient. I don't get to do too many cookie cutter appraisals. Those are the only ones I see that three comps will work easily. If I have a sale with a pool, I try to produce two sales with a pool. If I have subject with a large workshop or barn, I try to produce two sales with a workshop or barn. Sometimes, they are not the most similar properties, but underwriters seem to think that we just pull numbers out of our behinds for adjustments. You all have done these type properties. You know the one with the enclosed pool, or 4,000 SF workshop, or the double lot. Somehow there are plenty of sales in the neighborhood, but none of them have the same added improvements. I don't see how you avoid using over three comps on these type properties. You give them three from the neighborhood and go on the comp hunt in surrounding areas for that same workshop or pool of double lot. We do it because we know that we will get the dreaded underwriter request "Appraiser to provide an additional sale with ..... like the subject." So I treat every assignment with the "what is the underwriter going to ask for on this property" and beat them to the punch. I don't believe that underwriter's get suspicious when they see more than three comps. If they did why would they ask for additional comps on the loans they underwrite?

 

[Larry Lyke]

Oh, I use 4th comps and 5th comps and 6th comps in the originally submitted appraisal if it suits my purpose. My scenario about how to manage the comps over three is for illustration.

 

[Richard Carlsen]

I use 4 and 5 comps all of the time in our low-density rural market in Northern Michigan. Because of the limited number of houses with resulting limited annual sales, this cuts out about 50% of the UW calls I used to get. I also have a large description of the market in the addendum telling the UW about the general Northern Michigan market and that there are no urban areas north of Bay City (100 miles south).

I add these sentences to the end of my decription of the comps in the sales grid: "To support market levels (no.) additional sales are included in this report. Comps may exceed certain guidelines but are considered adequate to reasonably estimate subject's value."