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

[residentialguy]

Here is an example of how I present the subject contract in my Reconciliation
SUBJECT CONTRACT
The subject contract was considered and the agreed upon price of those market participants falls within a reasonable range of the market's increasing price trend as shown in the Market Conditions section of this report. The listing agent, as well as the buyer were personally interviewed in depth as to the conditions of that sale agreement. The buyer had extensive knowledge in the market, explained what other properties he considered and why he felt this property was the best decision financially. The buyer and seller appeared to be each acting prudently, knowledgeably; the price does not appear to be affected by undue stimulus and both buyer and seller appear to be typically motivated; they were well informed or well advised, and each seem to be acting in what they consider their own best interest; there was a reasonable time allowed for exposure in the open market; payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale - thus weight is placed on the subject contract as a relevant indicator of market value and is strongly supported by the sales comparison when factoring market trend, as well as cost analysis.

 

[Kitarkus]

Here is an example of how I present the subject contract in my Reconciliation
SUBJECT CONTRACT
The subject contract was considered and the agreed upon price of those market participants falls within a reasonable range of the market's increasing price trend as shown in the Market Conditions section of this report. The listing agent, as well as the buyer were personally interviewed in depth as to the conditions of that sale agreement. The buyer had extensive knowledge in the market, explained what other properties he considered and why he felt this property was the best decision financially. The buyer and seller appeared to be each acting prudently, knowledgeably; the price does not appear to be affected by undue stimulus and both buyer and seller appear to be typically motivated; they were well informed or well advised, and each seem to be acting in what they consider their own best interest; there was a reasonable time allowed for exposure in the open market; payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale - thus weight is placed on the subject contract as a relevant indicator of market value and is strongly supported by the sales comparison when factoring market trend, as well as cost analysis.

Thanks for that.

Yup...I hear you and I do not disagree. Although back/forth...we agree on more than we disagree. I appreciate your opinions and insight.

My market area is experiencing a condition where recent and historically lower volume winter period renders the ability to credibly formulate an opinion of increasing values....well....difficult. Despite very low DOM, undersupply, and contract prices which surpass the most recent settled sales....I am without tangible data to support increasing trends. Just another day at the office here....where the UW's are driving the proverbial 'bus' and rendering me to passenger status.

Your logic is sound. Despite sound logic, the conditions within my market area where the most relevant settled sales are not supportive of current contract prices poses a significant dilemma. Our analysis of Contract Prices and the reasoning(s) among Buyers/Sellers is significant and worthy of consideration. DIRECT weighting of a Contract within a reconciliation of value negates the very reason for the Appraisal Profession's existence. I am not cynical of each/every contract, however, I am aware that most Buyers and their Agents are looking solely at listings and seldom at actual settled sales data. Most Buyers are only aware of whether a particular property appears a 'reasonable deal' at a given moment in time based SOLELY upon their options (inventory) at that slice in time. It is our job to develop an opinion of market value based upon settled sales and our analysis of market conditions within an industry that demands bracketing.

 

[residentialguy]

It is our job to develop an opinion of market value based upon settled sales and our analysis of market conditions within an industry that demands brack

Ok...I supported my statements, now your turn. Please quote or post a link from USPAP or respected appraisal teaching that supports what you just said.

 

[Kitarkus]

I can't....and I've already told you that I agree with you more than I disagree.

Listen...I'm not a rubber stamper. I do my job and have earned a good reputation. This good reputation serves me generally well and my analyses are supported and seldom disputed (by reasonable non stakeholders anyway). Now...as it relates to my Lender/Clients who intend to sell their paper to FNMA. 16 years of Underwriter requirements have 'informed' me that they demand bracketing of my opinion of market value...both the unadjusted sales prices among the most relevant comps....and their adjusted sales prices...they want a bracket! This is not new to you surely. VA is much more reasonable...and they do not require bracketing unadjusted sales prices...which should be common sense for anyone in the industry.

I enjoy the interesting discussion of Appraisal Theory....and I am in agreement with much of your last posts....I'm not picking a fight....and I don't feel that I am always "right". I only wish that the UW's could accept my Reports intended for lending purposes which occasionally (now more than ever) express an opinion of market value which surpasses (modestly) the reported settled sales prices among the most recent and relevant sales. They just don't give a damn how much data I report relating to the motivations of the Buyer/Seller, the lack of inventory, the low DOM, the Contract price, or any other damn piece of relevant information. They want to check their "yup...he bracketed' box...so they can ship it on down the line. This is the purpose of my posts. Not Appraisal theory....but how to adequately and appropriately appraise the properties that we are discussing....the higher than prior sales - low inventory - rabid Buyer's market purchase transactions....where the Buyer is paying more than prior buyers.

Am I the only appraiser who finds this to be the case? Perhaps some appraisers include some more distant and more expensive (not truly relevant) sale to bracket and thus 'affirm' for the powers that be....allowing that magical 'box' to be checked. I personally would prefer to NOT include irrelevant distant sales whose sole purpose within a Report is to bracket a price...merely to satisfy some box checker.

 

[residentialguy]

Listen...I'm not a rubber stamper

Nor am I and none of my posts suggested such a thing, in fact I stated that we are NOT to target. So why did you post this?

16 years of Underwriter requirements have 'informed' me that they demand bracketing of my opinion of market value...both the unadjusted sales prices among the most relevant comps....and their adjusted sales prices...they want a bracket!

Usually you can find a superior comp to bracket the sale price. Sometimes you can't and they have to live with that. Next time that happens ask them to send you the link of that FNMA or USPAP requirement (hint, there is no such requirement).

 

[Kitarkus]

I'm not implying that you are a rubber stamper. Gawd man....I'm attempting to give you some basis for my standpoint...mine....not yours. This isn't a fight or a battle and I'm not making it one.

 

[residentialguy]

I'm not implying that you are a rubber stamper. Gawd man....I'm attempting to give you some basis for my standpoint...mine....not yours. This isn't a fight or a battle and I'm not making it one.

Out of no where you bring up "rubber stamp", which was never part of the conversation. I never suggested you rubber stamped and I clearly showed that targeting has nothing to do with it.. Not trying to fight, just asked a question. Gawd.

Now, how about the second part of my post about dealing with UW non-existent requirements.

 

[BarrySW1963]

But if you were "right" you would have predicted the transaction would consummate at the contract price. You opined something less. So if you are true to your own opinion, you cannot use the closed sale price at the true "market value" (sale price) - rather you have to adjust it DOWN to your opinion of value, otherwise, you are proving yourself to be an incompetent appraiser. You can't have it both ways. You cannot opine something isn't worth what the contract was for only to turn around and use that very sale as a comp at the contract price.

Should there be a /s at the end of that?

An appraiser's opinion is an opinion. Closed price is a fact.

I'd be curious to read the explanation/support for the adjustment, given that your opinion of value for that sale was the confidential result of an different assignment, with the intended use of assisting the lender in making a lending decision, not for the buyer to make a buying decision.

 

[Terrel L. Shields]

given that your opinion of value for that sale was the confidential result of an different assignment

I don't have to disclose where I got the idea that it was overpriced. That is not an issue. That contract is factual information. It is not opinion. That sale price is fact. MV is somewhere in the mix but it is not "fact" rather opinion. So I have no problem when I have valued one higher than the sale price, to use that sale and adjust it up based on it being a "below market sale". Just finished one. Contract. in the public record, it was "lis pendens" - and thus a distressed sale. Purchased by a lawyer whose bro. is a broker. Needed a quick sale to avoid foreclosure. It was then flipped for more money. I didn't use it, but did research it enough to figure out why it sold cheap then sold much higher only a few months later.

 

[residentialguy]

I'd be curious to read the explanation/support for the adjustment, given that your opinion of value for that sale was the confidential result of an different assignment, with the intended use of assisting the lender in making a lending decision, not for the buyer to make a buying decision.

There is a reason in the conditions of the sale which causes a sale to sell over or under market value, that's why we have to verify the subject and the comps (motivations, finance, concessions, etc) So you verified the subject and there had to be some reason that caused the subject to sell above/below market value. You still verify it as a comp later. What happened to that reason?