"Quantifiable Market-Derived Methods" for adjustments required by FNMA/USPAP

[J Grant]

What do you think market value is, other than the intrinsic value point that the 'market' is willing to pay? Replace 'market' with 'intrinsic' if that helps you understand?

Definition of intrinsic (from AI):
"The word "intrinsic" means belonging to or inherent in something's essential nature, or originating from within a thing, rather than depending on external factors. For example, the intrinsic value of a diamond refers to its inherent worth"

Diamonds also are appraised for their market value - what they might sell for , whether or not their intrinsic value is X. And a diamond has certain unchanging characteristics, number of carats, size, clarity, facets, and rarity. Diamonds are not fixed location either. They are light and small and have an international market.

 

[J Grant]

Typically, water is cheap and diamonds are expensive.

A diamond can have an intrinsic value of a $10,000. (for example )

Put a person on a deserted island in the hot sun for 2 days or longer without water, and it's life or death time to choose-the diamond or a gallon of water, the only water on the island, and guess what they would choose ( or be worth more in that situation.. An extreme example of supply nd demand but diamonds can fluctuate in price too.

 

[sputnam]

In some cases, "based on my experience" means "I don't really have support, I am just claiming that I do." Evidence of that type of behavior can be found in the threads where someone posts, "I was asked to show how how I got my adjustment for XXXXX, what do I do?"

Maybe if everyone actually read (and could remember) USPAP along with all of the AO's and FAQ's we wouldn't see this. The appraiser's experience absolutely is not acceptable as support for an adjustment.... or for the site value... or for building cost data. Where experience comes into play is in reconciliation however, even there the reasons for the appraiser's conclusion should be explained. "Comp 1 is most proximate, recent, and similar to the subject and is given most weight." works. "Based on the appraiser's experience and knowledge of the area...", doesn't.

 

[Non Sequitur]

 

[Terrel L. Shields]

White Deer, Texas.

I spent several days there one afternoon... Ditto Booker and Lipscomb.

How do you determine whether the results made sense or not?

The crux of the problem or crust of the biscuit if you will...

The solution is to obtain a large enough data set to make some sense of some of it. And that, in a large rural area like the north half of the panhandle of Tx has to be to take in data from several counties. I do the same in NE Oklahoma by using the entire MLS. Is it perfect, nope, But it works. OTOH, a simple single linear regression works well when you have few data points if you have points that are variable enough to draw a trend line and estimate the formulas with it.

 

[Elliott]

View attachment 103145

Excellent!

And here are the Adjusted R^2 summary with an N's of over 800,000 reports that show the 'correlation' that is the basis of the finding that AI (not the Institute), GSEs, and experts say that they have proof that 'appraisers are racially biased.' I wonder how meaningless the R^2s were before they were 'adjusted.' Some of us were awake during Statistics class.

 

[alebrewer]

I spent several days there one afternoon... Ditto Booker and Lipscomb.


The crux of the problem or crust of the biscuit if you will...

The solution is to obtain a large enough data set to make some sense of some of it. And that, in a large rural area like the north half of the panhandle of Tx has to be to take in data from several counties. I do the same in NE Oklahoma by using the entire MLS. Is it perfect, nope, But it works. OTOH, a simple single linear regression works well when you have few data points if you have points that are variable enough to draw a trend line and estimate the formulas with it.

Part of that analysis, however, has to include (at least with the SCA) the determination of whether the adjustments applied draw the range tighter or not. If not, there's no way of knowing whether your adjustments are appropriate - other than that they're most likely not.

 

[Surf Cat]

It's interesting that an appraiser has to show proof and illustrate "quantifiable, market derived methods" for adjustments when Realtors, who set the price for properties, use a CMA and their "local market expertise". Realtors provide a snapshot to the sellers of how the market/ buyers perceive the current market.

In essence, Realtors use their "experience" and feelz where an appraiser cannot.....anymore.

I've met Realtors at a lot of purchase assignments and been handed a few MLS listings of how they derived their list price. I've NEVER been handed an Excel spreadsheet of an analysis on how they derived their list price. Just sayin....

 

[alebrewer]

It's interesting that an appraiser has to show proof and illustrate "quantifiable, market derived methods" for adjustments when Realtors, who set the price for properties, use a CMA and their "local market expertise". Realtors provide a snapshot to the sellers of how the market/ buyers perceive the current market.

In essence, Realtors use their "experience" and feelz where an appraiser cannot.....anymore.

I've met Realtors at a lot of purchase assignments and been handed a few MLS listings of how they derived their list price. I've NEVER been handed an Excel spreadsheet of an analysis on how they derived their list price. Just sayin....

Do you think that is, in part, due to the fact that folks know Realtors are acting with a personal interest in the transaction, thus there's really no impetus for them to be impartial?

 

[DWiley]

It's interesting that an appraiser has to show proof and illustrate "quantifiable, market derived methods" for adjustments when Realtors, who set the price for properties, use a CMA and their "local market expertise". Realtors provide a snapshot to the sellers of how the market/ buyers perceive the current market.

In essence, Realtors use their "experience" and feelz where an appraiser cannot.....anymore.

I've met Realtors at a lot of purchase assignments and been handed a few MLS listings of how they derived their list price. I've NEVER been handed an Excel spreadsheet of an analysis on how they derived their list price. Just sayin....

When was "experience and feelz" ever a recognized method/technique for appraisal?