Please comment regarding the Contract Price being higher than the Appraised Value.

[George Hatch]

Even if it wasn't a requirement (and it always has been), I always found that it was easier to get out in front in my original report than make an assumption that nobody cared; and for those who did I could come back later and treat it as a repair to my original appraisal.

Sometimes faster isn't necessarily quicker.

Besides that, if you're dealing with clients who want to pressure you with reconsiderations after the fact then it seems to me that exercising a little common sense by anticipating the basis of those questions is to your advantage. By cutting those questions off before they even get transmitted you're saving yourself a lot more time and hassle than simply waiting for that request to come bouncing back and getting mad about it then. It's exactly the same reason that you acknowledge the other, less directly comparable sales data in your analysis and the general reasons why you didn't use them as direct comps in the first place. You're trying to cut that argument off before it even gets started.

 

[J Grant]

I don't have any problems with my clients. I was using examples of problems that appraisers face re from clients.

Your clients appreciate your comments and explantation and mine appreciate my reports, so we both are doing fine. We have different opinions on the matter of volantarily providing explanations when a contract price differs from OMV.

 

[George Hatch]

There are two tests for SOW acceptability. The expectations of the parties who commonly use such reports is only one of them. The actions of your peers - of which you've been seeing in this thread - is the other.

 

[J Grant]

Might be worth a poll to see what percent of appraisers supply an explanation before being asked!! It is not the worst thing in the world if it becomes common expectation that we have to supply an explanation. I just feel that it is one more burden placed on the appraiser, not the few minutes to write an explanation, but the whole idea of it, as if the entire report and reasoning behind comp selection and years of experience aren't enough, now the appraiser has to write a grovely explanation why their value is different from the contract price.. because a client expects something in a SOW, that differs from what an appraiser thinks is necessary to develop a credible report for the SOW. I thought the appraiser was supposed to be in charge of what they think is necessary to produce a credible report, now it is switching to the lender, the client, the realtor who can send in comps, the borrower who can send in comps, their dog who thought the doghouse in back should have commanded more value, and so on.

(Warning, the explanation that follows is a joke!! )

Explanation:

The subject has a sales contract price of $250,000. The appraiser's opinion of market value is $230,000. That means the opinion of value is different by $20,000 from the contract price, in case your calculator is broken.

The appraiser spent hours poring over comps and used the best comps that are most similar to the subject, are recent sales, in the same subdivision and year built with living area bracketed. If the appraiser had found better comps to support the contract price, the appraiser would have used them. Obviously, since these comps are not in the report, the appraiser did not find them.

The appraiser has no idea why the parties negoiated a sales price of $250,000. Their phone numbers are in the contract if the client cares to ask them.

The subject house was on the market for 300 days with no offers, and competing homes are priced for lower in MLS, it is a mystery why the borrower is willing to pay more for the subject house. The borrower is free to pay $250,000, or $300,000, or whatever they wish for the subject, however the appraiser's opinion of market value remains $220,000.

 

[Pittsburgh Pete]

It is always best to anticipate questions and answered them before they are asked--call it preventive/defensive appraising if you will. Spend an extra ten minutes anticipating questions and answering them and you'll save much more time not having to respond to the questions.

 

[J Grant]

Pittsburgh... truth in your statement for sure...

Wish we could flip it around and make the client pose the question to the realtor instead....(fantasy lol)

Client memo to realtor: My respected expert appraiser just turned in a solid report with a well supported opinion of market value of $220,000. Please explain, in detail, why your sales contract price is $250,000 for the subject, and send in comps that you feel support the sales price. The appraiser will charge $100 to review your comps."