"Playing" Appraiser

[Mike Garrett RAA]

RELO work is different. They create their own definition of market value, read the form some time. Relocaton companies ask the appraiser to forecast trends, as an example, and they base their marketing period on something less than current market in many cases. I am doing one this morning, in fact.

Now to the issue at hand. I almost always pull one or two "extra comps". Why make a 2nd trip, especially if it is a ways away. When in rapidly changing markets the use of additional comparables to support the trend can be important. The VA says it's ok to use a time adjustment, if necessary, but they want listings to support the adjustment. So, if I do a time adjustment, I use six (6) comps. While I don't necessarily agree that listings are really good indicators of value...I comply with their wishes.

To me, it makes more sense to use six solds with the older one's reflecting the change in the market. Remember that three (3) comps is considered a "MINIMUM" requirement .. not maximum. I just completed an appraisal on new construction (an in-fill in an older subdivision). This home was $30,000 above the highest sale in this area. I used six comparables because my best representative sales were all more than 10 miles distant. By the way, the value was well supported by the cost approach.

This is what appraising is all about...use your brain, something AVMs don't have! If you feel you need additional support for your value conclusion...include additional comparables. They work well as compensating factors when you must deviate from the recommended guidelines.

Thus sayth the old guy.

 

[Larry Lyke]

Richard --

Quote: ** 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." **

-- Because I'm still learning: What does the phrase "support market levels" mean in the context you use it?

-- Later you use the word "adequate." In my mind, if that is all the information that's available, I say exactly that. Using passive voice and beating around the bush tempts the UW to not feel guilty about nitpicking at you -- then, all of a sudden the UW is questionning your depth of research or commitment to the project.

 

[Pam]

Most national wholesale lenders have very experienced review appraisers on staff, and those reviewers have access to any number of data sources. When one of these reviewers asks for additional information, the chances are the reviewer has picked up on the recent sale of the house next door (if this was eliminated from the analysis because it was a non-arm's length transaction, that was not mentioned in the report), or picked up that the subject was listed for $460,000 for 407 days and therefore your $520,000 "final estimate of value" seems a little out of line, or noticed that the subject is part of a Superfund clean-up site, or any number of other "little" items which raised questions in his/her suspicious little mind.

 

[Larry Lyke]

I agree with you Pam.

I never have difficulty with UWs.

Haven't talked to one in many months.

Over the years, any question that came in over the transom or otherwise, I've tweaked into my magnum opus, aka as boilerplate. I start every appraisal (in its own category, of course) from the same basic idea. It is my memory bank. In preparing a new appraisal, much of it gets erased, but it's there to help me remember to address an issue.

Yes, to not make mention of very proximate activity when you are excluding it in a report is to look like you're careless or deceitful. Both attract an UW's attention.

 

[Ben Vukicevich SRA]

Hey old guy,

You wouldn't work long for the one client I have. No more than 3 comps, ever. Thus sayeth underwriting under the penalty of not being a valued provider......

Then, shalt thou count to three, no more, no less. Three shall be the number thou shall count. And the number of the counting shall be three. Four shall thou not count. Neither count thou two, excepting that thou then proceed to three. Five is right out.......-hey want movie is that from--anybody know? Lee from LA will. Damn good material/basis for underwriting loans. And you thought comedy movies were silly and had no merit whatsoever.

Ben

 

[Mike Garrett RAA]

thou mayest use what thou feelest worketh but it still isnt right! Fannie Mae guidlines sayth...minimum of three.

Thus sayth the old guy (who is usually always right) LOL

 

[Mike Garrett RAA]

Pam, just did a review for a national client..exactly what you are saying. Subject was listed for 6 months at $15,000 less than the appraised value for refi purposes. Appraiser failed to mention the listing, but underwriter caught it. Go figure?

 

[Larry Lyke]

Who you calling an 'old guy.'

I only submit 3 comps on 60% of my appraisals.

But I almost always write about one or two comps that are not gridded or photo'd in the appraisal and tell why they were not selected for use.

That always takes care of whatever the UW might find in her search. Makes me look dutiful -- which I am. Assiduous, which I am. Caring, which I am. Knock if off, Larry --

Yes, I care, but not in that way!

 

[Ben Vukicevich SRA]

L,

You're not the old guy. Garrett is. So sayeth he in his posts.

And Garrett, I did point that out to the underwriter that the FNMA URAR Cert/Limiting Conditions say a "minimum of three" but they don't care. The head honcho in underwriting says 3 and that's it, which makes it hard on atypical properties. If you want to work as a valued partner, you give three.

I think a review appraiser would like to see more than 3 comps to support a value on an atypical property. These particular underwriters seem to just want it to look "right" and to throw no red flags

Right?

Ben

 

[Farm Gal]

:lol: I have been known to bury a comment such as

Despite adjustments the exceed preferable guidlines, the above three sales are considered the best available. The appraiser considered other applicable sales in the development of this report, however due to an underwriting request has limited the sales in this summary report to the three 'best' sales.

Heve never had a client ask me to talke that out, and am pretty sure they have never read it!

I would bet dollars to doughnuts that most readers skip the second sentence as they roll their eyes at the 'standard wimpout phraseology'... but a careful reviewer should be able to read "My hands were somewhat tied by my everloving client, however I have backup for my position in my file.'

Has worked for me ! And have observed soem other folks copying it: as long as they really HAVE considered other sales and the ones they use ARE the best (and supported) I have no grief with imitation :wink: ... but woe betide the clod who ignored the three best on the street to go outside, and gave no reason why :twisted: They better duck!