Retrospective Appraisal report

[Metamorphic]

I say why not use a post dated sale. We bracket everything else, why not bracket time in a declining market. It helps show that you propertly understand what the market was doing at the time.

Its not "fair" to use post dated sales when reviewing another appraiser's OMV, but for a retro appraisal, why not?

 

[Stone]

That is not an answer to my question. And you seemed to link your answer again in that post.

The APPRAISER, not myself, used a sale that took place after his value date and before his effective date.
---Is that allowed?

Seems to me you should know this if you are going to be "sending back" reports.

 

[keuler]

Now that I have had some time to think about this problem, I can respond.

First, thank you to those who helped, even if it wasn’t in a straight forward manner.
Second, those who didn’t help, ok be mad. Just remember you represent your community, and you should think twice before posting at times.

Here is a quote from the posting rules for this section. Some of you should reread it.

“You should put your best foot (words) forward since you represent the profession. You are "the appraiser" and should answer the questions in a professional, straight forward manner.”

Last thing in my defense, I work in the loan review department and I do a review (compliance check) of appraisals to make sure they are adequate for the loan. I only check to make sure the appraiser certifies they followed the USPAP and do a check to the best of my knowledge, and I always cite it and reference it. I have the most current copy sitting next to me and I read it a lot. I have taken a USPAP class, and so far appraisal classes seem to lack substance. I have believe they are too easy and do not truly test your knowledge of appraisal standards. With the ease of these courses, no wonder everyone and their mother can become a certified appraiser. The title does not mean they are good, or does how long they have been in the business. It is how hard the individual works.
Again, I do more of a compliance check. I make sure the appraiser follows our in-house, OCC, Freddie Mac, and USPAP guidelines. I do nothing more. I never question value or if they chose the best comparable or not. I know I do not have enough experience to do that, if this comes up I send it to someone who is experienced enough. I would, red flag, appraisals from the verbiage you all seem to use.

This appraisal that I am sending back, agree or disagree, but I have that ability. I, on the banks behalf and the one who will be loaning out the money, has the right to say if something provides sufficient credibility to be used for the loan purpose. And remember, no matter what the appraiser gets paid 100% of the fee they requested the say day they had us the appraisal.

First and foremost, the appraiser used three comparables from a developing neighborhood. From what I have been taught, it is no dependent on the developer alone, but also the builder. The developer sold the lots of comp 1, 2, and 3 and the subject to the builder. The builder then sold a completed homes on comp 1-3 to a person and has now sold a “to be completed home” that is the subject. We, the bank, Freddie Mac, and the OCC do not believe this gives a good market value. Thus I am requesting the appraiser includes a 4th comparable from a competing neighborhood.

For the date issue, I read this post from 2007 (http://appraisersforum.com/showthread.php?t=129907 ). This post helped me a great deal as statement 3 didn’t help a whole lot. The appraiser must have made a mistake on his dates. Here are the four dates he presents on the appraisal:
Effective Date: 11/13/19
Report Signed 11/24/09
Reconciliation (value as completed): 9/3/09
Value as of: 11/13/09
This is where I ran into a hang up. I noticed the dates, thought retro and noticed the date of sale on Comp #1 was after the reconciliation date. All together my first assumption was wrong, but after educating myself more I now believe the appraiser has made a mistake on his Reconciliation date. I will contact the appraiser, ask that he further explains the date issue and the date of comparable #1 and go from there.

Again, disagree or agree and hate it or love it, the appraisers I deal with don’t mind. They enjoy getting paid full fee, on delivery, and with a two week turnaround time. If I have a question here or there about their appraisal not being clear to me, the intended user, they have always been happy to answer my question. I just would rather have something to back up where I am coming from, for example a page and line number is the USPAP, OCC, or whatever guidelines we have to follow before I bother an appraiser with a question.


One last thing, in one of my classes or the USPAP, I remember a statement. That is, the effective date can be and most likely is but not always the same as the valuation date. And here is a quote from the USPAP Statement 3 lines 2586-2588, "Current appraisals occur when the effective date of the appraisal is contemporaneous with the date of the report. Since most appraisals require current value opinions, the importance of specifying both the date of the report and the effective date of the analysis is sometimes lost." I have noticed many appraisers “have lost” this and the OCC has noticed his and has reminded us of it. Thus, I require the appraiser to state Effective date, date of the report, and state as of … the subject is valued at … as we the bank need to be covered as much as the appraiser does. ---for AlwaysLearning, feel free to comment. If you can prove with a source that I should not do this. I will change it. The source must be able to stand up to the OCC.

 

[Metamorphic]

With all due respect for your ability to do what ever you want.

I think you need to reconsider.

Consider the following:
extrapolation and interpolation

Extrapolation is an estimation of a value based on extending a known sequence of values or facts beyond the area that is certainly known.
Interpolation is an estimation of a value within two known values in a sequence of values.

http://whatis.techtarget.com/definition/0,,sid9_gci214482,00.html

It should be obvious that interpolation is much more reliable and credible that extrapolation. Extrapolation, by definition, involves making assumptions beyond the scope of what is known.

We as appraiser spend most of our time extrapolating. We look at yesterday and try to figure out what it tells us about today. We extending a known sequence of values (the sales prices of properties similar to the subject that sold in the past) or facts beyond the area that is certainly known to arrive at an opinion of market value today. Obviously, the less far you need to "extent the known sequence of values" the better because the potential error is less; that's why everybody wants "recent" comps not just comps.

By taking sales more recent than the date of valuation on a retrospective appraisal you are not only considering "where the market was" in your analysis, you're taking into account "where the market will be". You are forcing all your assumptions to the discipline of these two know points of reference. The resulting OMV will be framed by reality, instead of just using the reality of past sales as a jumping off point into conjecture.

 

[Walter Kirk]

If the comparable was exposed to the market (listed or under contract) on or around the date of valuation it would be proper to utilize it in a retrospective appraisal even though it didn't close until after the valuation date.

 

[AlwaysLearning]

Now that I have had some time to think about this problem, I can respond.

First, thank you to those who helped, even if it wasn’t in a straight forward manner.
Second, those who didn’t help, ok be mad. Just remember you represent your community, and you should think twice before posting at times.

Here is a quote from the posting rules for this section. Some of you should reread it.

“You should put your best foot (words) forward since you represent the profession. You are "the appraiser" and should answer the questions in a professional, straight forward manner.”

Last thing in my defense, I work in the loan review department and I do a review (compliance check) of appraisals to make sure they are adequate for the loan. I only check to make sure the appraiser certifies they followed the USPAP and do a check to the best of my knowledge, and I always cite it and reference it. I have the most current copy sitting next to me and I read it a lot. I have taken a USPAP class, and so far appraisal classes seem to lack substance. I have believe they are too easy and do not truly test your knowledge of appraisal standards. With the ease of these courses, no wonder everyone and their mother can become a certified appraiser. The title does not mean they are good, or does how long they have been in the business. It is how hard the individual works.
Again, I do more of a compliance check. I make sure the appraiser follows our in-house, OCC, Freddie Mac, and USPAP guidelines. I do nothing more. I never question value or if they chose the best comparable or not. I know I do not have enough experience to do that, if this comes up I send it to someone who is experienced enough. I would, red flag, appraisals from the verbiage you all seem to use.

This appraisal that I am sending back, agree or disagree, but I have that ability. I, on the banks behalf and the one who will be loaning out the money, has the right to say if something provides sufficient credibility to be used for the loan purpose. And remember, no matter what the appraiser gets paid 100% of the fee they requested the say day they had us the appraisal.

First and foremost, the appraiser used three comparables from a developing neighborhood. From what I have been taught, it is no dependent on the developer alone, but also the builder. The developer sold the lots of comp 1, 2, and 3 and the subject to the builder. The builder then sold a completed homes on comp 1-3 to a person and has now sold a “to be completed home” that is the subject. We, the bank, Freddie Mac, and the OCC do not believe this gives a good market value. Thus I am requesting the appraiser includes a 4th comparable from a competing neighborhood.

For the date issue, I read this post from 2007 (http://appraisersforum.com/showthread.php?t=129907 ). This post helped me a great deal as statement 3 didn’t help a whole lot. The appraiser must have made a mistake on his dates. Here are the four dates he presents on the appraisal:
Effective Date: 11/13/19
Report Signed 11/24/09
Reconciliation (value as completed): 9/3/09
Value as of: 11/13/09
This is where I ran into a hang up. I noticed the dates, thought retro and noticed the date of sale on Comp #1 was after the reconciliation date. All together my first assumption was wrong, but after educating myself more I now believe the appraiser has made a mistake on his Reconciliation date. I will contact the appraiser, ask that he further explains the date issue and the date of comparable #1 and go from there.

Again, disagree or agree and hate it or love it, the appraisers I deal with don’t mind. They enjoy getting paid full fee, on delivery, and with a two week turnaround time. If I have a question here or there about their appraisal not being clear to me, the intended user, they have always been happy to answer my question. I just would rather have something to back up where I am coming from, for example a page and line number is the USPAP, OCC, or whatever guidelines we have to follow before I bother an appraiser with a question.


One last thing, in one of my classes or the USPAP, I remember a statement. That is, the effective date can be and most likely is but not always the same as the valuation date. And here is a quote from the USPAP Statement 3 lines 2586-2588, "Current appraisals occur when the effective date of the appraisal is contemporaneous with the date of the report. Since most appraisals require current value opinions, the importance of specifying both the date of the report and the effective date of the analysis is sometimes lost." I have noticed many appraisers “have lost” this and the OCC has noticed his and has reminded us of it. Thus, I require the appraiser to state Effective date, date of the report, and state as of … the subject is valued at … as we the bank need to be covered as much as the appraiser does. ---for AlwaysLearning, feel free to comment. If you can prove with a source that I should not do this. I will change it. The source must be able to stand up to the OCC.

Are you referring to the following statement that I made in post #7?

“The date of value is the same as the effective date (same thing)”

If yes, then read "USPAP Frequently Asked Questions" (2008-2009 Edition) Question #83 page #F-40.
link is attached for your convenience (unfortunately The Appraisal Foundation's "Online USPAP" is compatible only with Internet Explorer)
http://209.190.242.26/html/USPAP2008/FAQ/faq_83_.htm

As far as the four dates, I do agree, they are confusing.

Only two dates are essential to an appraisal report: the effective date (or the date of value) and the date of the report.

And the very confusing (and new to me) date is the reconciliation date. I have never used a “reconciliation date” so I can only guess what it indicates.

But then, do you have more than one value opinion in this report? (If two value opinions are communicated in one report then there may be two different effective dates)