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

[chad hampton]

Of course we use experience to determine market adjustments. Every profession out there uses experience in their field. I don’t really care what three letter DC bureaucrats who haven’t appraised a home in two decades say on the subject.

They can live in fantasy land if they want. They collect that big fat government check regardless The rest of us live in the real world.

 

[Joe Flacco]

We use our experience in the development of the appraisal, but we should be more specific in the reporting than citing experience.

I have a lot of information I use from past assignments that others don't have, but I try to be more specific than "based on my experience".

 

[Elliott]

Write a couple of pages on the development of each adjustment and UW won't ask for more.

 

[Fernando]

Write a couple of pages on the development of each adjustment and UW won't ask for more.

Write couple of pages like what RCA would write.

 

[Mike Ault]

Write couple of pages like what RCA would write.

20 years ago we had an appraiser in my market that would make sure that every comparable adjusted out to the exact same value. He was pretty sharp and conscientious as well, but he finally stopped doing that when he got tired of explaining how a bathroom could be worth $7000 on one appraisal and $17,000 on another in the same neighborhood and price range.

 

[chad hampton]

Write a couple of pages on the development of each adjustment and UW won't ask for more.

Agreed. but a couple sentences will do.

 

[DWiley]

We use our experience in the development of the appraisal, but we should be more specific in the reporting than citing experience.

I have a lot of information I use from past assignments that others don't have, but I try to be more specific than "based on my experience".

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?"

In other cases, it is just ineffective communication. Suppose one is appraising a home in large subdivision and the subject property has a pool. Grouped data and sensitivity analysis is used to derive a pool adjustment of $X. Two weeks later the appraiser has a similar assignment in the same market area. In such a case, some will write that the pool adjustment was "based on experience" when it was actually based on re-use of prior analysis. As the ASB noted, experience in and of itself is not a method of support.

 

[Zoe]

I use depreciated cost estimate many times in sales comparison approach. It is recognized method of adjustment in sales comparison approach.

 

[chad hampton]

I’m glad I use a nice cool software package from one of the tech Bros. It tells me my pool adjustment is between 10,000 and 300,000. So as long as I pick something in between those numbers, I’m good. I put in a nice little graph and print out. Those three letter DC bureaucracies will accept anything as long as it comes from the tech bros.

 

[alebrewer]

20 years ago we had an appraiser in my market that would make sure that every comparable adjusted out to the exact same value. He was pretty sharp and conscientious as well, but he finally stopped doing that when he got tired of explaining how a bathroom could be worth $7000 on one appraisal and $17,000 on another in the same neighborhood and price range.

Yes and no. When your data set is ~ 6 observations, some variance in extracted adjustments is expected - even in fairly homogeneous markets. I wouldn't expect that much a difference though...