Question from potential private customer re reconciliation at sale price.

[J Grant]

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I've no doubt there is a level of anchor bias that can be laid at the feet of 'pressure to hit a value'. I've long contended, though, that the appraisal problem for a purchase appraisal (given that we're afforded the PC) is: is the contract price a reasonable estimate of market value? IMO - purchase appraisals would work fine if the appraiser didn't even report a value - just a 'yes' or 'now' WRT the question.

That opposed to refinance appraisals, where the question is: "What is the subject's market value?"

Both a refinance and a purchase assignment have the SAME purpose on top of the appraisal form ( purpose: Derive an opinion of market value)

 

[J Grant]

If appraisers had to work blind, with no idea what the list price or contract price was, the tide would go out and we would quickly see who isn't wearing any shorts. It would also humble everyone here.

If appraisers had to work blind I bet the better appraisers then would be the same as the better appraisers now ( coming within a close range of X credibly supported MV opinion. ) The appraisers who suck get away with it by hitting a CS number , unless or until they run into a review which showed it as not supported -

 

[CGinMN]

Both a refinance and a purchase assignment have the SAME purpose on top of the appraisal form ( purpose: Derive an opinion of market value)

Except refinance appraisals are missing one key piece of data that purchase appraisals have. The question is whether appraisers should be considering it or not. If not, then don't provide it. If yes, expect it to be considered, but don't then call it "contract bias."

 

[J Grant]

IMO - point value appraisals are a misnomer. At any given point in time a property will always express a range of value. Price is a point - value is a range. (again, IMO).

USPAP states that the market value opinion can be expressed either as a point or a range

 

[Terrel L. Shields]

That got me thinking, does the general public feel an appraisal is inaccurate if reconciled at the sale price??

Not in 30 years has the public actually embraced "public trust"...

 

[J Grant]

This is basically what I do. I comment in my reconciliation that the adjusted sales of the comparables indicate the purchase price is supported...... and come in at the purchase price LOL. This has upset people for years. I have when it's glaringly obvious, opined at a higher value than the contract price.

What's more upsetting however, is when you reconcile below the purchase price and state that the most similar comparable sales to that of the subject, appear not to support the purchase price. Back in the mortgage broker days or with the AMC's..... doesn't matter, everyone's upset.

I always thought the appraised value should be a range of the adjusted sales, not an "exact" number and let the lender make the final decision. No one's that good...

Imo, an appraiser who believes "No one's that good" should not be appraising. PS the GSE's and clients hear it and think yeah, why use appraisers if they are not good enough. Would you go to a dentist who said that about themselves?

The appraiser's education and knowledge are supposed to make them "that good" , aka competent enough to develop a credibly supported MV opinion as a point value. This does not mean it is the one God like one and only one value for a property .

Your last statement is a WAIVER -using the argument about a range of values, and the lender estimates the exact number as a cherry-picked, make-the-deal work value estimate. A low bar exists for it to fall within the GSE AVM range which nobody else sees.

Note to others who have made the above sentiment that Surf Cat did, ( too many over the years ) - you all helped the GSE's argument to use WAIVERS..

 

[Surf Cat]

the fact is that most appraisers STILL approach the appraisal problem with at least a mental cheat sheet, and when asked to demonstrate HOW they arrive at their opinions and conclusions, they really don't know.

And the powers that be are doing the very same thing with AVMs and collateral underwriter...."80% LTV met.....approved for waiver".

 

[J Grant]

Not in 30 years has the public actually embraced "public trust"...

The public is not tasked with embracing anything - we, the appraisers, are tasked with not abusing the public trust by adhering to ethical conduct and professional standards.

 

[TerryRohrer]

Imo, an appraiser who believes "No one's that good" should not be appraising. And you are not the only one who has expressed this career killer of a thought - which the clients heard and read and say well, the appraisers dont' think they are good enough, so why use them?

The appraiser's education and knowledge are supposed to make them "that good" , aka competent enough to develop a credibly supported MV opinion as a point value. This does not mean it is the one God like one and only one value for a property. This is why the appraiser's value opinions is limited to as of X date for that client and set of users.

Anyone else is still free to have their own idea of value or price.

Our minds are amazing storytelling machines able to conjure up a multiplex of stories about our future, our past, and even the very present moment. How you spin these stories is vital to your overall happiness with life – and also the level of your achievement. It is the workings of your inner dialogue that lead us to that “can or can’t” in the very famous Henry Ford quote: “If you think you can or if you think you can’t, either way, you are right.”

https://www.brainzmagazine.com/post/understanding-the-dynamics-of-inner-dialogue-how-your-cognitive-conversations-can-help-your-self

 

[J Grant]

Except refinance appraisals are missing one key piece of data that purchase appraisals have. The question is whether appraisers should be considering it or not. If not, then don't provide it. If yes, expect it to be considered, but don't then call it "contract bias."

A purchase appraiser has an additional key piece of data ( sale contract and price ) , and it certainly should be considered.
However, the appraisal "problem" or purpose is still the same: develop an MV opinion for the property.

Alsie says the appraisal problem is "different " when there is a PC because now the appraiser is trying to support the CS as a reasonable value estimate. (he snot the only one ) But that is not what USPAP says, and it is not what is stated on top of the URAR we use for lender appraisals (or on any other form or narrative that I am aware of - when does it ever say the purpose of the appraisal is to support the SC prie ? (it doesnt' of course )