Prudent?

[J Grant]

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.

A review does not ask about a 100k opinion vs a 102k opinion. A review asks about the quality, credibility, accuracy of an appraisal. So whether an appraisal had a value of 100k or 102k , ( or any other number ) the review would focus on how the value was developed.

OP" Usually my response is - appraisers do one of two things 1. Stick you with the highest most recent sale or 2. Use some other less similar “comps” that are really not similar, but expand the range or use other slightly less similar “comps” and fudge the adjustments to come in at the supported pending prices..."

It's not about 2%, 100k vs 102k, it;s about how appraiser got there. The italics above are from the OP post #1. If an appraiser fudges adjustments and or uses less similar comps to opine 102k THAT ( the fudged adjusmtnet,s lousy comps )is the what the review finds-if an appraiser did not fudge adjustments or use less similar sales to reach 100k. , THAT is why the reviewer would agree with 100k. Get it?

The number hitter tricks (fudging adjustments, relying on /using less similar sales rather than more similar sales , ignoring or minimizing condition issues, are the same number hitter tricks whether to push value by 2 k or by 20k or by 200k.

 

[residentialguy]

The number hitter tricks (fudging adjustments, relying on /using less similar sales rather than more similar sales , ignoring or minimizing condition issues, are the same number hitter tricks whether to push value by 2 k or by 20k or by 200k

More likely, the only thing you're ignoring by being off by $2,000 from the contract is the market participants of the subject and the natural variance of the market itself.

 

[J Grant]

More likely, the only thing you're ignoring by being off by $2,000 from the contract is the market participants of the subject and the natural variance of the market itself.

Since when are appraisals judged by being "off" a SC price in a review? Saying a contract was "ignored" is more number hitting spin- if the opinion of market value was 100k, one assumes the SC price was strongly considered, since the sales in building are 96k, 98k, and only one sale at 100k. Natural variance in the market is always present, so what? We still have to credibly support our market value opinion.

 

[residentialguy]

Saying a contract was "ignored" is more number hitting spin-

Ignoring market evidence is not a number hitting spin. It's just the opposite. Ignoring market evidence is what number hitters do...both up and down.

 

[J Grant]

so you would ignore all the sales evidence and favor the SC price? Okay, fine, your call.

Not hitting a SC price does not mean the (one) piece of market evidence was ignored...an appraiser would talk about the SC price as well , If you ignore all the comps and favor the SC price, you are heavily weighting one piece of market evidence over the predominant other evidence.

BTW, when other market evidence strongly supports a SC price nothing wrong with opining it even if it is higher than the last sale in the condo, BUT other sold similar comps and other value elements, such as subject is superior in some way, should also support the SC price.

 

[residentialguy]

Natural variance in the market is always present, so what? We still have to credibly support our market value opinion.

Good to hear you say that... so now we have a unit that closed at 100k and subject at 102k.. You just acknowledged that there is a natural variance in the market, thus you can credibly support $102k, which is a very small market variance.

 

[J Grant]

Spin about natural variance credibly supporting 102k when none of the most similar comps do? Why does the URAR ask for an accurate opinion of value, when double talk about natural variance as the excuse do the trick..

I get where you are coming from but bottom line it's just another excuse to hit a number ...at least call it that! The OP admitted it as such when they said the way an appraiser bridges the 2k (or X $ amount ) gap is by fudging adjustments and relying on less similar sales rather than the value indicator of the more similar sales.

 

[J Grant]

Good to hear you say that... so now we have a unit that closed at 100k and subject at 102k.. You just acknowledged that there is a natural variance in the market, thus you can credibly support $102k, which is a very small market variance.

I acknowledged natural variance int he market but said to appraise above highest last sale in subject condo there still should be OTHER market support for doing so! Such as other SIMILAR closes higher price sales ( not just less similar higher price sales ), and ideally, subject is superior in some way to the higher price last sale as well.

 

[J Grant]

Good to hear you say that... so now we have a unit that closed at 100k and subject at 102k.. You just acknowledged that there is a natural variance in the market, thus you can credibly support $102k, which is a very small market variance.

If its about natural variance, the variance can be 100k as well as 102k, right ? However the most similar sales ALSO indicates 100k. That is why 100k is the better supported value.

 

[J Grant]

Good to hear you say that... so now we have a unit that closed at 100k and subject at 102k.. You just acknowledged that there is a natural variance in the market, thus you can credibly support $102k, which is a very small market variance.

We are providing the credibly supported market value opinion to our client, we are, not telling a buyer what to pay. If our OMV is 100k, let the buyer put the 2k "variance" down in cash and pay 102k.!

isn't it notable though how often instead of the buyer putting more down, the parties re negotiate to the lower MV opinion? What does that tell you? Whatever the outcome, we are not telling the buyer what to pay or what the seller should accept. Buyers and sellers in financed deals should understand the role of appraisal in financed offers and if they don't, they were not well informed or well advised.