Prudent?

[J Grant]

Prices rising due to explainable factors ( a BART system, increased economic growth, new buyers entering market etc) is a different dynamic than prices fueled by not much else than other rising prices...

 

[hastalavista]

Prices rising due to explainable factors ( a BART system, increased economic growth, new buyers entering market etc) is a different dynamic than prices fueled by not much else than other rising prices...

Prices typically rise for a reason.
Carnivore described conditions in his market that supports that dynamic. His analysis goes deeper than most I've seen (for a residential mortgage appraisal).
Without that background, someone (I won't name any names ) might presume an appraiser is pushing the value upward.
With that background, the rising prices (and impact on value) are more of the expectation rather than the exception.

 

[J Grant]

Whether prices are rising, stable, or declining, appraisers should have a grasp of why that is, and be able to relate it to population, trends, business growth or stagnation, as well as any influence of interest rates or avail financing. Add in that different segments of the market can perform at different levels in the same region within the same time frame. Prices may be rising for lower price starter homes, yet stable at the upper price points, for example. How astute an appraiser is about these factors is part of competency.

However, whether a market is rising, stable, or declining, a pushed value or number hit /agenda driven appraisal is easy to spot, if one knows what to look for. It actually is achieved by doing just what the OP described; by fudging adjustments ( or ignoring a property condition ) and by relying on less similar comps instead of the more similar comps, when prices of the more similar comps are not leading to the desired target.

 

[hastalavista]

However, whether a market is rising, stable, or declining, a pushed value or number hit /agenda driven appraisal is easy to spot, if one knows what to look for.

It is easy to spot a "pushed value or number hit" within 1-2%?
You should stop originating work and become a full time reviewer.

 

[J Grant]

"D-Prices typically rise for a reason."

Prices typically rise for a myriad of reasons, some of which are external to the housing market such as economic growth or more buyers entering an area or investors coming in and fixing up a blighted area , or job and wage growth.

Other reasons are internal to the housing market such as low interest rates which tend to spur higher prices as does easier credit access.

A "bubble" develops when the rising prices start to lose a sustainable relationship to real economic growth or rental returns on investment properties, and when the main reason for rising prices is speculative buying and selling...a pushed appraisal can be present in any market but we tend to see them more in bubble markets.

 

[J Grant]

It is easy to spot a "pushed value or number hit" within 1-2%?
You should stop originating work and become a full time reviewer.

I did a lot of reveiwing at one time...within 1-2 % of WHAT????? this spin about 1-2% off something drives me nuts. Once again, WHAT is the 1-2 % "within" , or "off " of? A sales price?

A reviewer actually looks at the value last- the review form asks questions about the comps used, adjustments, etc. Most of the review does not concern itself with value, though at the end, the reviewer is asked if they agree or disagree with the value-and if they disagree why, and usually asked to then provide their own value opinion, ( an appraisal)

A reviewer is not asked if they agree or disagree with a sales price- lol. They are only asked if they agree or disagree with a value opinion. Pushed appraisals are not just seen with purchases they can occur for refinance or other assignments- an appraiser appraising a property "lower" to help a tax or divorce case is a pushed appraisal ( pushing the value toward a desired target $ value, when the more credible support is for a different $ value )

 

[George Hatch]

I don't care why prices are rising or falling. I mostly do "what", not "why".

 

[J Grant]

I don't care why prices are rising or falling. I mostly do "what", not "why".

The "why" is part of the "what"- prices rising due to more buyers entering a region or economic growth or investment in an area differs from prices rising due to low interest teaser rates with no money/r low down and easy credit terms ...

 

[residentialguy]

I did a lot of reveiwing at one time...within 1-2 % of WHAT????? this spin about 1-2% off something drives me nuts. Once again, WHAT is the 1-2 % "within" , or "off " of? A sales price?

No, OP's scenario: Market trend: steady 24% increase over the last year. Comp 1 closed on the effective date 100k, Comp 2 sold one month ago for 98k Comp 3 sold 3 months ago 96k Comp 4 pending at 102k.
100k opinion vs 102k opinion. What's 2% off? Do the math.

 

[J Grant]

Denis did not allude to the OP's example, but even if he did, an appraisal review does not ask the reviewer how close or far an original appraisal was to a sale Price (such as 2% ) The review asks reviewer about how the OA (origination appraisal) was developed- a series of questions about cost approach, the sales comps, adjustments, etc.