Reconciling Comps Adjusted Values To Determine Final Subject Value

[J Grant]

As a reviewer I think, "what are they thinking" when I see a Final Reconciliation like 750,490.

As a reviewer I think, "are they thinking"?

As a reviewer, shouldn't' you recognize that most likely came straight from a computer software or AVM reconciliation the appraiser dumped in as their value?

 

[BRCJR]

As a reviewer, shouldn't' you recognize that most likely came straight from a computer software or AVM reconciliation the appraiser dumped in as their value?

Yes, I am not smarter than a 6th grader but, I know when the software spits out a number and an Appraiser, most likely, used it.

 

[J Grant]

Yes, I am not smarter than a 6th grader but, I know when the software spits out a number and an Appraiser, most likely, used it.

Okay, then you know what the appraiser was "thinking"...they let the software do the thinking for them!

 

[Michigan CG]

I think, "what are they thinking" when I see a Final Reconciliation like 750,490.

My thought is "who trained this moron?"

 

[TRESinc]

As a reviewer, shouldn't' you recognize that most likely came straight from a computer software or AVM reconciliation the appraiser dumped in as their value?

which still begs the same question - "what were they thinking?"

i had one of these a few weeks ago to review. i am paraphrasing here but comp 1 had 4 adjustments other than GLA and all were rounded to the thousand ($3,000, -$2,000, etc) but the GLA adjustment was something like $3,587. same thing for at least one other comp in the report. i recall sitting back in my chair and wondering why anyone would do such a thing. then i remembered the reports i have seen that claim adjustments are based on matched pairs/regression analysis/pick-you-favorite-method with no support for any of it, and in a lot of cases it is painfully obvious they just pulled a number out of the air.there are lots of appraisers who only put lipstick on their reports...

 

[J Grant]

My thought is "who trained this moron?"

The appraiser coach?

.

 

[Tina Nace]

I appreciate all the responses and explanations about using averages and weighted averages. This appraiser has always been very “precise” with his values. It just makes me laugh and think he must be calculating in every gallon of oil in the tank, or giving them credit for the new energy efficient light bulbs they put in the ceiling fan last week.

 

[J Grant]

I appreciate all the responses and explanations about using averages and weighted averages. This appraiser has always been very “precise” with his values. It just makes me laugh and think he must be calculating in every gallon of oil in the tank, or giving them credit for the new energy efficient light bulbs they put in the ceiling fan last week.

Well, if their value opinion ending in odd $ amount is market and appraisal supported, so be it.

However, you should be aware that peer practice is a key USPAP standard in appraisal,. The fact is few (if any ) competent appraisers (peers) account for every gallon of oil level of precision because it is not possible to credibly extract contributory value for every tiny element in a property. (and most typically motivated buyers do not arrive at a price that way)

 

[hastalavista]

I appreciate all the responses and explanations about using averages and weighted averages. This appraiser has always been very “precise” with his values. It just makes me laugh and think he must be calculating in every gallon of oil in the tank, or giving them credit for the new energy efficient light bulbs they put in the ceiling fan last week.

But at the end of the day, does it matter to what level of precision the value is concluded in terms of credibility and acceptability?
While we might mock (and I have done so) the value indication that comes in at $437,521, am I going to determine that it is unreliable, but a reliable indicator would have been $437,000 or $438,000? The answer is "no". If $437,000 or $438,000 are supported, then so is $437,521. Its the precision is unexpected, but in the context of the intended use and SOW, it is acceptable.

The failure to understand the USPAP is the bigger problem. The practice of rounding a value opinion to the nearest dollar in a mortgage finance transaction (or most others... but I've been court where such a small difference results in the owner having his house foreclosed upon vs. having a 2nd lien dismissed) is not expected and not taught, and is arguably not a "best practice", but by itself, it isn't significant in the evaluation of the overall credibility of the the value.

 

[J Grant]

But at the end of the day, does it matter to what level of precision the value is concluded in terms of credibility and acceptability?
While we might mock (and I have done so) the value indication that comes in at $437,521, am I going to determine that it is unreliable, but a reliable indicator would have been $437,000 or $438,000? The answer is "no". If $437,000 or $438,000 are supported, then so is $437,521. Its the precision is unexpected, but in the context of the intended use and SOW, it is acceptable.

The failure to understand the USPAP is the bigger problem. The practice of rounding a value opinion to the nearest dollar in a mortgage finance transaction (or most others... but I've been court where such a small difference results in the owner having his house foreclosed upon vs. having a 2nd lien dismissed) is not expected and not taught, and is arguably not a "best practice", but by itself, it isn't significant in the evaluation of the overall credibility of the the value.

While $437, 521 can be supported...

It is rarely seen because we are not ringing up items on a cash register to pennies and dollar. We are opining value. Outside of builder contracts which do add up costs items cash register style, it is rare to see a sales contract that does not come in at a whole number . If buyers and sellers transact at whole numbers , value opinions should reflect that. Buyers rarely break down price into minute components so why should we .

However rounding to the nearest whole number is different than rounding up by thousands of dollars to hit an otherwise poorly supported SC price.

The problem is not that $437,521 is mocked, the problem is that an appraiser coming in at $437,000 on a $440,000 contract price is mocked .

If the preponderate of support is for $437,000, that is where the MV opinion should be. However, in all but rare cases, appraisers jump up to the SC $440,000, for fear of being mocked by peers, and for fear of push back from clients and RE agents for being so close but not at SC price.

These papers focus on statistics but fail to address the real world business pressures which are the true cause of most appraisal deficiencies.