Reconciling Comps Adjusted Values To Determine Final Subject Value

[Deleted member 130081]

I work in a bank reviewing appraisals. I recently received an appraisal that looked odd to me. Comp #1's adjusted sales price was $242,580, Comp #2 $230,610 and Comp #3 $231,140. The final value given to the subject was $242,580. I asked the appraiser how she came to that conclusion, and the response she put in the report was "A USPAP CHANGE, WE ARE NO LONGER USING A WEIGHTED AVERAGE OF THE COMPS, WE NOW CHOOSE A COMP BASED ON FACTORS THAT MAKE IT THE MOST CONSISTANT WITH THE SUBJECT, SUCH AS SQUARE FOOT, LOCATION, LOT SIZE, CONDITION, AMENITIES, NEIGHBORHOOD, NET AND/OR GROSS ADJUSTMENT, AS I HAVE DONE AND STATED WHY I CHOSE COMP ONE TO SUPPORT THE VALUE CONCLUSION." When I called and spoke with her, she told me USPAP does not permit averaging (I agree), it does not mention weighted averaging (I agree), and this was the method used way back when that her office has recently decided to go back to.

I am very curious to hear other appraisers opinion on this.

Wow.

 

[Addie]

My husband is an appraiser, I am not. I have helped him, here and there, for the past 20 years. I’ve very recently began lurking here to see if I want to get my license to become an appraiser over the next 4 years.

Here’s what I don’t understand about some of the commenters. They say “peer standards/practice is....”

That’s a terrible stance. It’s the same stance as everyone was jumping off the bridge.


My husband does a lot of appraisal review work of other appraisers. I’d say ~40% of his business.

Of this ~40%, 100% do not summarize anything in a report. 100% do not summarize the best use of the property. (Always hear this as my husband is a stickler for that)

So does peer standards apply? Can my husband get in trouble for always calling out appraisers for not summarizing summary appraisals as it is peer standard to not summarize them?

 

[residentialguy]

100% do not summarize anything in a report. 100% do not summarize the best use of the property.

100% huh? Nice wide brush you have there.

 

[Addie]

100% huh? Nice wide brush you have there.

That’s what he says. He does reviews for JP Morgan Chase mainly.

Disregard the 100%. Insert a very large percent.

Does this peer standard of not summarizing an appraisal a pass? “This appraisal was not summarized including the best use as it is peer standards to not summarize a summary appraisal report?”

If so, very good to know as an out. Which actually makes sense. If everyone doing it, it’s not enforceable.

 

[Terrel L. Shields]

So does peer standards apply? Can my husband get in trouble for always calling out appraisers for not summarizing summary appraisals as it is peer standard to not summarize them?

Valid point, but you've (your husband) not reviewed my reports...I (like many of us here) refuse to work for scumbag banks like Chase...which 100% suggests perhaps only scumbags work for Chase since most appraisers with any moxie avoid them like the plague...or like Wells Fargo.

So Chase gets the kind of appraisers they deserve. That certainly does seem like the appropriate peer for a bank so hated by most appraisers. Only the dregs gladly work for Chase or Stagecoach because they are jerks. Good appraisers hold their noses and work for them only due to the cruel pinch of want, and likely don't need to go into review. Chase automatically sent every appraisal in to state boards for a property that was foreclosed upon. Is that the appraisers fault? Or the loan originator who lent to a deadbeat and a bank whose reviewers were pretty inept if they didn't quash those appraisals if they were really that bad?

 

[residentialguy]

While $437, 521 can be supported...

$437,521??? Lol...what a novice. I can appraise it to $437,521.37
That's right...I'm that good.

 

[hastalavista]

Here’s what I don’t understand about some of the commenters. They say “peer standards/practice is....”

The USPAP specifically defines what is an appraiser's peers:



Note that there are two requirements:
1. Expertise in the assignment type. I may be an expert at SFRs but know nothing about how to complete a report and testify for litigation. My expertise may be in mortgage finance transactions and may only include 1-4 residential units.
2. Competency. I'm able to competently perform the assignment. I may be an expert at tract development SFRs except I've never done a high-end ($10m) luxury home; a different set of skills and knowledge would be needed for the luxury home vs. a vanilla tract home.

You can read the Competency Rule to see what is required to be competent, but part of that requirement would be to complete the assignment consistent with the USPAP. The USPAP requires certain things to be summarized, not stated (check-box). In addition, the report needs to be written in a manner that is meaningful to the client and intended users, consistent with the intended use and Scope of Work.

So, a "peer" just isn't other appraisers.
A "peer" is an appraiser who is competent and has the expertise to complete an assignment-type.
"Everyone does it" is not peer practice by itself.
"An appraiser who has expertise and competence in this kind of assignment would do this...." would be a "peer" for that type of assignment.

 

[ucbruin]

@Addie

I did find your comments and view point rather refreshing and entertaining (I'm not being condescending)....
I enjoy your straight forwardness....

BTW, I hope your husband encourages you to use the next 4 years to train/educate yourself in some other field....
Unless any appraisal income you generate will just be play money for the family....