Reviewer's opinion of value

[Fred]

However, 15 & 19 are "closer" or more similar to each other, than 11 & 15.19 is 26.67% larger than 15, while 15 is 36.36% larger than 11.

Raimo,
In terms of the debate, the above work up suggest that the 19-acre sale used by the reviewed appraiser is more like the 15-acre subject, than Greg’s 10-acre sale is like 15-acre subject – but you “agreed” with Greg.

Are you trying to add an element of economic theory, to what has been a question of math and appraisal convention
Math rules – your work up loses the common denominator (15). At one point you are calculating how different something is from 15 (which is the right question) and in the other case you are calculating how different 15 is from something else.
Appraisal convention – In one calculation you are setting up adjustment of the sale to subject (which is right) and in the in the other calculation you are setting up the adjustment of subject to sale. (Seconded by Jim P)
Economics - The value difference between 19 and 15 is likely smaller than the value difference between 11 and 15 (because diminishing return is much more likely than plottage).

So, unless Greg has some other evidence up his sleeve for the moot court to consider, I don’t “agree” that 10 is closer to 15. 19 is closer to 15: math-wise, in terms of appraisal convention, or even in economic likelihood.

 

[Jungle Boy]

Steve

I happen to agree with what you and Jim have said. And if you carefully read what I've said (you have to read between the lines as well :glare, you'll notice that.

All I'm saying is : 15 & 19 have more in common with each other than 15 & 11 have in common with each other.

In other words, all else being equal, same, even similar, a 19 acre lot would be a better comparable to a 15 acre subject, than a 11 acre lot would be.

I agree with Greg using the 10 acre lot as a comparable, because he decided to bracket the subject and probably had other reasons we may not know about.

 

[Jim Onderisin]

George: A reviewer itemizes strengths and weaknesses of an appraisal and indicates the reasonableness of its value opinion. The reviewer provides both a review and an appraisal service; indicating the appraisal opinion is not reasonable implies the value is higher or lower. The client wants to know how much higher or lower.

The reviewer should provide a reasonable value range to answer the client's question, "How much higher/lower?" A point value implies the reviewer operates under the same scope of work as did the appraiser, which is almost never the case. If it were, the client would pay the reviewer the equivalent of separate fees to review and appraise.

Is that the way it works in the real world? No, but you asked how it should work.

 

[Jeff Riggs]

As long as the reviewer commented only, and specifically, to those items which he/she detirmed to be at odds with his/her opinion of comparable selection and analysis that lead to the final value conclusion. The review appraiser can have whatever opinion they want, at that point it is their report (same property, new assignment and new scope of work). Do not take your review personally. Most reviews are requested,whether they know it or not, are asked to review the value as a matter of risk analysis and risk control. Therefore they may have been requested to analyze some level of acceptable risk tolerance. The requester is most likely looking at LTV issues depending on the EMV. Most tolerance levels fall within a 10%, 5% and 3% catagory. If you performed due delignece, provided a complete scope of work, adquately addressed the market conditions, selected relevant comparable sales, applied appropriate market derived adjustments; than you provided a meaningful value conclusion. Only the reviewer knows what the scope of work was as it applied to that particular loan, if they know at all! Nobody is going to lose their license witnin a 10% varience or for the difference of opinion that arrived within that similar value range. If you provided a well developed opinion of value, as described above, than you've done your job. My suggestion would be to first review the value. If the value is incorrect (out of some level of tolerance, than don't be afraid to state those tolerance levels as you have determined), than begin filter it through your experience and knowledge of the market and develop your value opinion. In the current market we live and work in, it may be neccessay to apply "out of the box" methods and techniques. Multi-tiered market analysis, the use of AVM's (they're cheap(er) now), develop your own AVM with imported MLS data using Excel....my point is, if your value is more appropriately supported than you can provide an alternate value conclusion based on your analysis that was ultimately derived from the report you were provided to review. Most lenders are looking for fraud or concerned about declining markets and looking to ultimately control their risk. Go ahead and provide your best value conclusion but support it within your scope of work.