REO sales and "Market Value"

[residentialguy]

If you do call a client, and they tell you they want the "most probable price of a non distressed sale", and thus you have revised the definition of MV, then how do you handle that?

Trust me....I'm not worried about that possibility. That's not the type of value they want.

 

[J Grant]

WRONG. You need to get your head out of the form.

PER USPAP:

INTENDED USE:

​

​

the use or uses of an appraiser’s reported appraisal, appraisal review, or appraisal consultingassignment opinions and conclusions, as identified by the appraiser based on communication with the client at the time of the assignment.

The client assigned a MV purpose appraisal. We are both in agreement on it. There is no need for me to communicate further with the client.​

SOW RULE

An appraiser must properly identify the problem to be solved in order to determine the appropriate scope of work.​

If you are going to change the purpose of the appraisal according to a consultation with your client about an identified "problme", then you need to use a diff form that would allow you to state the new purpose of appraisal or new, revised MV definintion. (Since we can't change the stated purpose on the URAR form).

FYI, And here are the instructions of the intended user who created that form.​

When using an REO sale or short sale as a comparable sale, the appraiser must make appropriate adjustments to account for any market reaction to differences between the REO or short sale property and the subject property, including, but not limited to, differences in property condition.​

Got the last one, so what? If there is an adjustment, make it, if your market is not showing an adjustsment for an REO or short sale, then explain.

 

[residentialguy]

The client assigned a MV purpose appraisal. We are both in agreement on it. There is no need for me to communicate further with the client.

LOL...you've got to be kidding me. We're here arguing about what MV means and you're saying no further clarity from the client is necessary. Me thinks you don't want to hear the truth.


If you are going to change the purpose of the appraisal according to a consultation with your client about an identified "problme", then you need to use a diff form that would allow you to state the new purpose of appraisal or new, revised MV definintion.

No you don't. You're just clarifying what is meant by the form's definition.

 

[J Grant]

The client assigned a MV purpose appraisal. We are both in agreement on it. There is no need for me to communicate further with the client.

LOL...you've got to be kidding me. We're here arguing about what MV means and you're saying no further clarity from the client is necessary. Me thinks you don't want to hear the truth.



That is BS, and an excuse for you to run around finding the highest price sales (in opposition to the MV def, which states most probable price). The client is assigning a MV definition FIRREA appraisal. The client, a lender or agent of the lender such as an AMC, is well informed of the definiiton of MV. They don't need us to call them and ask them, "Which definition of the definition of market value do you want?"

That is actually misleading your client, because depending who you speak with on the phone, their understanding of what you are talking about may not be in line with the "real client", the lender itself, which includes the underwriting dept.

Who are you talking to, when you call the "client"? A comissioned loan officer? A clerk who assigns the appraisal? We are not supposed to be interacting with the commissioned loan person. Are you talking to underwriting? Getting a greenlight from the chief appraiser as to "what kind of market value", they "really " want?

If you are going to change the purpose of the appraisal according to a consultation with your client about an identified "problme", then you need to use a diff form that would allow you to state the new purpose of appraisal or new, revised MV definintion.

No you don't. You're just clarifying what is meant by the form's definition.

More BS. If you are going to have a conversation with ysomeone from client office to "clarify" the form 's definition whereby that "clarifcation" results in excluding certain data, or shaping report results, you need to state that on the report. Otherwise, you are providing misleading assignment results to your CLIENT...the one personal contact you schooze with on the phone who buys your spiel about non distressed sale version of the MV devinition does not necessarily reprsesent the true users of the appraisal on the client side (Such as underwriting dept, for one).

 

[Randolph Kinney]

Reading a little history on FIRREA:

When the USPAP was first written, the Appraisal Standards Board recognized that every opinion of value is necessarily based on some concept of market exposure. And because sales data is available to support estimates of the period of market exposure before an effective date of value but no data is available to support an opinion of the market exposure period following an effective date of value, the board decided it was important that opinions of market value be based on historic “marketing time”. They also decided historic “marketing time” preceding the effective date of value could be distinguished from estimates of “marketing time” in the future by giving it a new name: The name they gave it was “exposure time”.

In the course of assigning clear meaning to the term exposure time, the term marketing time was necessarily redefined as well: Before the USPAP took up this subject, the ordinary language term “marketing time” was used to refer both to a period of market exposure before an effective date of value, as well as to a period of market exposure following an effective date of value. Once exposure time was identified as a time period preceding the effective date of value and linked to an opinion of market value, marketing time was redefined as a technical term to describe an estimate of a period time following an effective date of value.

The words “exposure time” do not come easily to appraisers. For many years, the term “marketing time” was used by appraisers in the same ambiguous manner as it was, and still today is, used by other market participants: it was used to describe both retrospective and prospective estimates of the period of time it might take, or might have taken, to sell a property.

Similarly, the ordinary language term “marketing time” was split in two when the term “exposure time” was introduced into the USPAP. But in this instance, one of the new terms, “marketing time” retained the name of the original ordinary language term. As a result, whenever we see the words “marketing time” used by an appraiser, we need to consider whether she is talking about the generic ordinary English-language term (which does not differentiate between the time period before and after an effective date of value), or whether she is using the term as it now is more narrowly used* in the USPAP.

* N. B. Neither the term “marketing time” nor the term “exposure time” is included among the definitions that are part of the USPAP.

However, we should remember that one of the distinguishing features of every profession is the special terms and language it develops to communicate its professional findings. When members of any profession are unfamiliar with the meaning of that profession’s technical terms, or if they are careless in their use of them, they run the risk of confusing their readers, which diminishes trust.

Like this bit of history on marketing time and exposure time points to confusion, so does market value.

 

[residentialguy]

They don't need us to call them and ask them, "Which definition of the definition of market value do you want?"

Yes, when appraiers can't even agree, we do need to clarify. And yes, I state it on my report and clarify exactly what MV means in the report. I hope you clarify that your market value means the most probable price of a REO sale so they understand why over 40% of your appraisals are below contract.

More BS. If you are going to have a conversation with ysomeone from client office to "clarify" the form 's definition whereby that "clarifcation" results in excluding certain data, or shaping report results, you need to state that on the report. Otherwise, you are providing misleading assignment results to your CLIENT...the one personal contact you schooze with on the phone who buys your spiel about non distressed sale version of the MV devinition does not necessarily reprsesent the true users of the appraisal on the client side (Such as underwriting dept, for one).

LOL...ok, because that person you talk to might be wrong, it's more right to not even attempt to clarify with the client and just bury your head in the sand, ignore AI saying you should try to communicate, ignore USPAP saying you should communicate...and that is somehow a stronger defense to your actions.

Cool


Go for it. :laugh:

 

[George Hatch]

I absolutely, positively *cannot wait* until the market turns and some of you guys bring your newfound concern for participant identities and the primacy of "typical circa 1999" owner-user motivations into the appraisals of properties in rapidly increasing markets.

The spectacle that I'm sure will unfold should be very entertaining.

Meanwhile, I'm going to continue to do what I always do, bull run or bear bust alike, and follow the prevailing trends. That completely reduces the need to engage in any intellectual acrobatics.

WRT to who wants to do what, I value my apathy and consider it an asset to my work. If a realty agent or loan originator were to refer to me as someone who worked extra hard to find their value I'd consider it a grave insult.

BTW and FTR, I just appraised a residential property for $150,000 more than the contract price because the listing broker was an idiot and they screwed their client.

 

[residentialguy]

I absolutely, positively *cannot wait* until the market turns and some of you guys bring your newfound concern for participant identities and the primacy of "typical circa 1999" owner-user motivations into the appraisals of properties in rapidly increasing markets.

You've said this kind of thing before and it just doesn't pan out. What are you anticipating?

 

[George Hatch]

I'm anticipating some hypocritical actions on your part.

 

[J Grant]

They don't need us to call them and ask them, "Which definition of the definition of market value do you want?"

Yes, when appraiers can't even agree, we do need to clarify. And yes, I state it on my report and clarify exactly what MV means in the report. I hope you clarify that your market value means the most probable price of a REO sale so they understand why over 40% of your appraisals are below contract.

By "clarifying " what MV means in your report, you are actually modifying the def of MV as preprinted on the cert, which we are instructed not to do. First you modify the definition to suit your agenda then you go ahead and appraise to your own modified definition of MV.

I don't believe most of your clients even understand the implication of what you are doing.

40% of my apprasiasl are not below contract, no idea where you got that from...and when I used to appraise a lot of REO as subject properties, some realtors would complain they were "too high", (which meant they couldn't buy them at a deep discount to flip them, boo hoo).

LOL...ok, because that person you talk to might be wrong, it's more right to not even attempt to clarify with the client and just bury your head in the sand, ignore AI saying you should try to communicate, ignore USPAP saying you should communicate...and that is somehow a stronger defense to your actions.

Cool
for it. :laugh:

Enjoy your own world of MV definitions you invent!
:laugh: