Question Regarding Page 1 Of URAR Contract Section. Please Help!

[residentialguy]

I have reviewed prior threads regarding this issue and still have concerns. I completed an assignment with a contract signed. by both the buyer and seller with an effective contract date of 01/09/2017. I was then provided an Amendment to the base contract changing the purchase price dated 01/20/2017, which was also signed by both the buyer and seller.

We are supposed to analyze the agreements. What motivated the change in the contract?

 

[Mr Rex]

137. DOES CHANGING THE SALE PRICE RESULT IN A NEW ASSIGNMENT?
Question: I recently completed an appraisal for mortgage financing purposes in a purchase
transaction and delivered the report to my client. My opinion of value did not
support the pending sale price. As a result, the purchase transaction was not
consummated. However, one week later the buyer and seller entered into a new
purchase agreement where the sale price coincided with my appraised value. My
client asked if I can provide a revised report that includes the analysis of the newly
agreed-upon sale price. To provide a revised appraisal report, must I consider the
client’s request as a new assignment?

Response: If the client does not require a more current effective date, USPAP would not mandate treating the
request as a new assignment. However, if the client does require a more current effective date, the
request must be treated as a new assignment.
In this example, regardless of whether the effective date is changed, the date of the report would
have to change to accurately reflect the appraiser’s consideration of the newly obtained agreement
of sale. Because the new purchase agreement was obtained after the date of the first report, the
revised report would need to have a date of report that is the same as or later than the date the new
purchase agreement was obtained by the appraiser.
In addition, the new report would also need to reflect the appraiser’s analysis of the prior
agreement of sale. In the development of an appraisal, an appraiser is required under Standards
Rule 1-1(b), to not commit a substantial error of omission or commission that significantly affects
an appraisal. Since information about the prior agreement of sale is known by the appraiser and
that information is relevant to the appraisal problem, it must be considered.
Additional related guidance may be found in Advisory Opinion 3, Update of a Prior Appraisal.

 

[residentialguy]

Not to forget

In addition, the new report would also need to reflect the appraiser’s analysis of the prior
agreement of sale. In the development of an appraisal, an appraiser is required under Standards
Rule 1-1(b), to not commit a substantial error of omission or commission that significantly affects
an appraisal. Since information about the prior agreement of sale is known by the appraiser and
that information is relevant to the appraisal problem, it must be considered.

 

[huntercharlie]

This post is probably too late to assist you. You did reference Fannie Mae, so I'm assuming you're trying to be GSE compliant. Fannie Mae addressed (or readdressed) this issue with an announcement on 12/06/2016 (SEL-2016-09) under Disclosure of Information to Appraisers. You should also be able to find this update in the Selling Guide under section B4-1.1-02.

 

[Amy Perkins]

There has been a lot of this changing of the sales price lately and amended contracts after we have reported our opinion. I do not like this one bit and we should really be paid for these revisions.

 

[huntercharlie]

There has been a lot of this changing of the sales price lately and amended contracts after we have reported our opinion. I do not like this one bit and we should really be paid for these revisions.

Disclosure of Information to Appraisers
Currently, we require the lender to provide the appraiser with all amendments made to a sales contract, including
amendments that are made after completion of the appraisal. With this update, we have clarified when the appraiser must
be provided with updates to the sales contract and circumstances that warrant updates to the appraisal. For example, if
the contract is amended in a way that affects the description of the real property used by the appraiser, then the lender
must provide the updated contract to the appraiser and the appraisal should be updated. However, minor updates to the
contract, such as changes to seller paid closing costs or changes to the contract price, do not require an updated
appraisal. In addition, we have updated the policy to require disclosure of changes to financing information (such as loan
fees and charges, and subordinate financing provided by interested parties) to the appraiser only for purchase
transactions.

Effective Date
This policy update is effective immediately (12/06/2016)

https://www.fanniemae.com/content/announcement/sel1609.pdf

 

[Amy Perkins]

We are fee appraisers, this means we don't work for free. If you have a change that occurs after the fact; we should be paid for reconsideration. Why shouldn't this go on a 1004D. Since we don't have time machines; we should not be making misleading reports that we have them. The other problem with this new rule or regulation is that agents may report a higher sales price only to make the value of the much lower sales price and higher perceived equity by the bank.

 

[bnmappraisal]

and we should really be paid for these revisions.

this boils down to a business decision

Why shouldn't this go on a 1004D

many reasons probably, but mostly because it is not an actual update (asking if the market is declining since the original) and it's not a Final asking if any conditions/improvements in the original report have been met (I paraphrase; didn't want to pull up the 1004D)

 

[Amy Perkins]

Say the market has a 10% variance and we consider the sales price which falls a the higher end of the range initially. Then they change the sales price to the lower end of the range, should this affect the value? All things considered, if it were a refinance we might use the middle to determine value. The sales contract is considered when we do an appraisal or it would not be included. There may not be any market influence driving the value and depending on your market value range that variance could be larger rather than smaller. Should sales contracts even be given to appraisers or is it now an attempt to influence us? The old switch-a-roo with the contract sales price may just be a way of getting a higher appraiser when the buyer is not willing to pay top dollar for a given property.

 

[Kitarkus]

Say the market has a 10% variance and we consider the sales price which falls a the higher end of the range initially. Then they change the sales price to the lower end of the range, should this affect the value? All things considered, if it were a refinance we might use the middle to determine value. The sales contract is considered when we do an appraisal or it would not be included. There may not be any market influence driving the value and depending on your market value range that variance could be larger rather than smaller. Should sales contracts even be given to appraisers or is it now an attempt to influence us? The old switch-a-roo with the contract sales price may just be a way of getting a higher appraiser when the buyer is not willing to pay top dollar for a given property.

You shouldn't be (1) weighting the contract in your final reconciliation nor should you (2) arbitrarily weight your final value opinion at one end of your adjusted sales price range or the other without some basis for your decision.

I do understand your frustration. I have always taken these revision request on the chin as part of doing business. They don't take me long to complete and are par for the course. You may think as you'd like....but you are provided the contract and amendments SOLELY so that you can determine the terms of the transaction and whether any extraordinary circumstances (transfers of personal property, owner 2nd loan, concessions, atypical financing terms etc) so that you may analyze their impact/potential impact. If having the contract makes you weary, perhaps you should perform your analysis first....then analyze the contract last.

As far as the switch-a-roo comment. Respectfully....you shouldn't give a damn what the purchase price is...you should concentrate on developing a credible opinion of market value. Whether they switch the contract price later or not....their change should have no bearing on a credibly developed opinion of market value for your Subject. Perhaps you should quit target shooting and do your Clients and Buyers the favor of completing the job you were tasked with?

"if it were a refinance we might use the middle value".....what??
"The sales contract is considered when we do an appraisal or it would not be included"....HUH??

Sorry to sound harsh....