Regarding Comp Selection:

[Pamela Crowley (Florida)]

The following is from the Fannie Mae Form 1004B 6-93:

APPRAISER'S CERTIFICATION: The appraiser certifies and agrees that:

1. I have researched the subject market area and have selected a minimum of three recent sales of properties most similar and proximate to the subject property for consideration in the sales comparison analysis and have made a dollar adjustment when appropriate to reflect the market reaction to those items of significant variation. If a significant item in a comparable property is superior to, or more favorable than, the subject property, I have made a negative adjustment to reduce the adjusted sales price of the comparable and, if a significant item in a comparable property is inferior to, or less favorable than the subject property, I have made a positive adjustment to increase the adjusted sales price of the comparable.

2. I have taken into consideration the factors that have an impact on value in my development of the estimate of market value in the appraisal report. I have not knowingly withheld any significant information from the appraisal report and I believe, to the best of my knowledge, that all statements and information in the appraisal report are true and correct.

I've started this as a new thread because another thread has gone into this discussion. This is from the FNMA form that most of us add to appraisals for lenders. This was written by Fannie Mae and this is what they want included. When we sign this, we are stating that this is what we have done.

Comments???

 

[Ross (CO)]

Pam, I think the typical, expected, and seemingly thorough data review and comparable selection process is adhered to by all of us, just about every time we launch, develop and conclude an appraisal assignment. Perhaps I am fortunate to live and work, for the most part, within a metro area of at least a 1/2 million people, in a relatively active r.e. market and sales are plentiful. So long as I select the key, essential and appropriate search parameters as I check MLS data, then I will end up with those 8 to 10 to 12 sales, with several pending sales to add if needed (or to learn that a pending sale has actually closed, yesterday, and records not amended yet !), and these provide plenty to consider and ultimately to grid those 6 (or dare I say 8 or 9) from which the final 3, et al, go into the report. I think that some may feel that to prove they perused "all" availabale data is the grind through ALL sales, of all varied stripe and color, of all oddball sale arrangement, and the sales which are chock-full and ripe for adjustment, just for the sake of doing adjustments. That may mean 30 to 40 to 50 sales. In that light, it could be said that an appraisal would NEVER END. One could analyze, and adjust, and re-select till the cows came home. One could spend 20, maybe upwards of 30 or 40 hours developing a report ---- but our clients can not wait that long nor are they going to PAY us for that type of research time ! I would do it if I could invoice, and get paid, $2000 for a 1004. We unfortunately run into hassles when we actually conclude a value, logically and reasonably, presenting 3 GOOD sales, of nearly identical properties, several "stone throws" from the subject, and we get accosted for NOT using oddball, inappropriate, skewed sales from a year ago, 10 miles away......just to help out these nice folks who need a break on reducing the burden of the debt they have created.

 

[Tim Hicks (Texas)]

As the last lender I dumped said, "comp selection is a gray area, an appraisal is just an opinion and another appraiser can choose any sale he desires is more comparable". My answer, "an appraisal is a fact based opinion and any appraiser that wants to skew the facts is dishonest. I think it is best that you and I part ways".

Pam. until others in our profession understand their responsibility, things will never change. It was this way when I started in 1991 and it appears to be worse than ever now. The lenders are the only ones that truly have control and we know how their checks and balances work.

 

[Austin]

Did anybody notice these key qualifying phrases in the certification posted above. I will make adjustments: “when appropriate, If, & if justifed.” Then the second section makes you take a blood oath that everything was appropriate and the "if's" were all taken care of. Kind of an iffy situation if you ax me. When appropriate that is. Just hope the boys & girls on the state appraisal boards have the same view of what is appropriate and iffy, because "if" they don't, the results may not be appropriate. "If" your particular appraisal circle has some buddies on the board, that is even more appropriate, but "if" you are going it alone your "if's" don't mean the same thing as the "if's" of the good old boys & girls in the state board and that can be very inappropriate.

 

[Mike Garrett RAA]

Ok Bill Clinton, define IF!

I personally prefer not to create any more verbage than necessary. If the client doesn't understand the appraisal process, why put yourself in harms way by trying to educate them?