Predominate Value (on form)

[Ca Ar Independent]

This has long been an issue with me, until a friend of mine took a recent class and informed me what he learned (which makes great sense):

When you do your MC research for COMPARABLE properties, you will have all the information you need to fill out this section. Even though it does not state "comparable" on page one, and I can find no guidance on this anywhere, the report "flows" properly when all of the information in your MC matches the information in the neighborhood section, as well as the top of page 2 (comparable sales and listing ranges). The information you report on the MC page should match what you report in your neighborhood section - that is why a competent underwriter will stip you if your value does not fall within this range, or is significantly off of the predominant figure. Another way to think about this - the fields directly to the left for housing trends should be supported by your MC page data. I have struggled with this concept, too, but after doing it this way, as taught in a class, the reports look a lot better, and if you feel the need to add a paragraph in your report to explain that these numbers are for comparable properties and not all properties in the area (and these numbers are NOT reconciled for differences to the subject) to feel better about it, then just do it.

I disagree completely. Page 1 asks for range in the neighborhood. If I'm appraising Montecito, I might have a range of $1M through $30M in the neighborhood with these NOT being outliers. My predominant value will be the most frequently occurring value as of the effective date. My 1004MC will utilize "SIMILAR" sales as requested and this data will correspond to the active/sold at the top of the marketing grid page, but are not indicative of the entire neighborhood, as asked on page 1. Many people in conforming market areas often do not understand the relevance of this. In my comments I state that the "subject is appraised above/below the predominant value of the neighborhood due to ..... blah blah".

 

[residentialguy]

I'm sorry, but that is just incorrect. The neighborhood section is just that "the neighborhood". Comps are not the neighborhood. It states "one-unit housing trends". Just because you don't find other "guidance on this anywhere" doesn't mean you can ignore what the form says. The is no other guidance saying that the state of the subject means state of the subject...but that doesn't allow you to put in a different state. The MC specifically states "Comparables" and pg one specifically states "Neighborhood" and "One-Unit Housing"

If you get stipped, you correct the phone monkey and laugh at him. Don't base your appraisal on stips. Do it correctly and explain it enough so that you don't get stipped.

I disagree completely. Page 1 asks for range in the neighborhood. If I'm appraising Montecito, I might have a range of $1M through $30M in the neighborhood with these NOT being outliers. My predominant value will be the most frequently occurring value as of the effective date. My 1004MC will utilize "SIMILAR" sales as requested and this data will correspond to the active/sold at the top of the marketing grid page, but are not indicative of the entire neighborhood, as asked on page 1. Many people in conforming market areas often do not understand the relevance of this. In my comments I state that the "subject is appraised above/below the predominant value of the neighborhood due to ..... blah blah".

Hey...stop copying! :laugh:

 

[Scott R Marshall]

Suggested response:

"How could it be an over-improvement if it's inside of the range?"

Succinct and sage advice. I'm stealing it!!!

 

[residentialguy]

Suggested response:

"How could it be an over-improvement if it's inside of the range?"

Succinct and sage advice. I'm stealing it!!!

Are you suggesting that only the very top house can be over-improved? Neighborhood of 1500-2000sq 1 level Q4 homes and if someone puts a 8,000 sq ft Q1 mansion there, it's over improved...but if he builds 2 of them, then it's not over-improved and get all that value he would have lost if he had only built one??? :mellow:

 

[Oceanic1]

This has long been an issue with me, until a friend of mine took a recent class and informed me what he learned (which makes great sense):

When you do your MC research for COMPARABLE properties, you will have all the information you need to fill out this section. Even though it does not state "comparable" on page one, and I can find no guidance on this anywhere, the report "flows" properly when all of the information in your MC matches the information in the neighborhood section, as well as the top of page 2 (comparable sales and listing ranges). The information you report on the MC page should match what you report in your neighborhood section - that is why a competent underwriter will stip you if your value does not fall within this range, or is significantly off of the predominant figure. Another way to think about this - the fields directly to the left for housing trends should be supported by your MC page data. I have struggled with this concept, too, but after doing it this way, as taught in a class, the reports look a lot better, and if you feel the need to add a paragraph in your report to explain that these numbers are for comparable properties and not all properties in the area (and these numbers are NOT reconciled for differences to the subject) to feel better about it, then just do it.

The neighborhood section doesn't ask for comparable properties only. It requests the price ranges for the entire neighborhood. This might be most evident on the land form of all places. The neighborhood section isn't asking for land sales ranges in this section, it asks for "single family housing". If the neighborhood section was to contain comparable sales info only, then the neighborhood section would be asking for "land sales" ranges. They want to find out what the overall condition of the market is, not just the market for properties like the subject.

 

[Ca Ar Independent]

Hey...stop copying! :laugh:

HEY! I can't help it if I actually AGREE with you! You're just not used to it on here from what I can see!

 

[residentialguy]

HEY! I can't help it if I actually AGREE with you! You're just not used to it on here from what I can see!

I can't help it that you guys are slow learners :laugh:

 

[Scott R Marshall]

Are you suggesting that only the very top house can be over-improved? Neighborhood of 1500-2000sq 1 level Q4 homes and if someone puts a 8,000 sq ft Q1 mansion there, it's over improved...but if he builds 2 of them, then it's not over-improved and get all that value he would have lost if he had only built one??? :mellow:

I guess it depends on what you consider an over-improvement. In the OP's scenario the home appraised for $500K, the high range was $575K and the predominant was $480K. Now while it's difficult to determine what parameters were utilized (all sales within a micro or macro market, all sales within the last 6/12/24/ever months, median/average/some other measure based on those sales, etc), it is obvious that in the OP's scenario either A) the reviewer is an idiot, B) the powers that be that decided that this is the type of computer program they needed to review reports are idiots or C) both of the above. And in a case like that, an answer like CANative provided is probably best suited.

Of course, one can be more "professional" and provide a more "reasonable" response but if your client is demanding clarification on a difference of less than 5% for this one item, I would shudder to think about what other "requirements" are necessary in their eyes and the time spent in making those comments.

Or one could avoid the whole scenario and just put the predominant as $500K, as some have suggested, and avoid the whole situation. Who cares about credibility and whether or not a report is misleading anyway?? :Eyecrazy:

 

[residentialguy]

Ok...that's what I figured you meant, which makes sense. Just didn't want the impression to be made to lurkers that if a higher house is found, then over-improvement issue disappears.

LOL on the last line

 

[CANative]

Are you suggesting that only the very top house can be over-improved? Neighborhood of 1500-2000sq 1 level Q4 homes and if someone puts a 8,000 sq ft Q1 mansion there, it's over improved...but if he builds 2 of them, then it's not over-improved and get all that value he would have lost if he had only built one??? :mellow:

No. I'm suggesting the QC nitwits are using sales price to determine the presence of an under or over-improvement. I'm also suggesting that the question is irrelevant on the face of it.