Revising a value for asset valuation appraisal

[V. Nightshade]

For an asset valuation REO appraisal that I did on May 9, I received a note asking if I was comfortable with the value, since there was a discrepancy between the broker's and my opinion of value. I looked at my appraisal and found a relatively minor calculation error that could affect my reconciliation, and I considered whether I could reconcile my data differently. (I was happy with the comps I used.) I appraised the property at $285K, apparently broker had it at something like $220K. Anyway, I also checked te MLS and discovered that in the past 2 weeks (after my appraisal), a lower GLA REO property on the same street, with the same lot size (subject is larger than typical) was put on the market at $180K and went Pending in 7 days. Since it is afterthe date of my appraisal, and I don't know anything about it (arms length transaction? ) do I need to say anything or comment about current conditions. Common sense tells me yes, I do, but I'd like some advice on this.

 

[Webbed Feet]

Nightshade,

You have self-doubt at this point. I don't know if you have a copy of what the broker did so you can see what you think about that. But if you are posting about this I think I would suggest providing a correction due to the math error and corrected final opinion based on that. First recheck your adjustments, especially any negative market (time) adjustments relative to that first effective date.

If you do have the broker work and find yourself agreeing with it, even if it is done at a later date (say a week later and this broker had a very important comp you did not) you will have to make a business choice if you should "Update" (new appraisal) with that effective date changed. That is a pretty significant gap in opinions. I appreciate your concern, but it may be impossible to reconcile unless you know exactly what the broker did to come up with his or hers. Just a "note" of concern from somebody doesn't do a whole lot for you without the broker's work included. Whoever sent it may as well have sent a note of concern to the broker due to your opinion without anything else with it. A bit meaningless if it was done that way.

Webbed.

 

[Betty H Church]

Whichever way you decide to go, be sure someone involved with the sale will confirm the agreed upon contract price. I'm finding realtors are listing REO homes very low, receiving multiple offers, and then selling at a price above what it was listed at or stated as being pending at.

 

[bart nathan]

Your value should be as is with typcial marketing time which might be 60-90 days depending on your area.

Then a client value of whatever exposed marketing time they want usually 90 or 120 days.

I would say your sale that sold with only 7 days on the market wasn't given enough time to be exposed for typical marketing times in my area and could be more of a liquidation sale.

 

[Mike Kennedy]

For an asset valuation REO appraisal that I did on May 9, I received a note asking if I was comfortable with the value, since there was a discrepancy between the broker's and my opinion of value. I looked at my appraisal and found a relatively minor calculation error that could affect my reconciliation, and I considered whether I could reconcile my data differently.

I would correct the "minor" calc error regardless of whether a "comp" arose subsequent to EDA and Report Date.
** BULLET THE EMAIL AS "REVISED/FINAL" replaces prior report and REQUIRE client confirmation.

(I was happy with the comps I used.) I appraised the property at $285K, apparently broker had it at something like $220K.

brokers opinion has nothing to do with yours.

Anyway, I also checked te MLS and discovered that in the past 2 weeks (after my appraisal), a lower GLA REO property on the same street, with the same lot size (subject is larger than typical) was put on the market at $180K and went Pending in 7 days.

Since it is afterthe date of my appraisal, and I don't know anything about it (arms length transaction? ) do I need to say anything or comment about current conditions.

If it was NOT on the market (check for prior listings under Different ML# as well), as of the EDA....then.....No.

Common sense tells me yes, I do, but I'd like some advice on this

 

[EVAUSA]

I've had similar requests to review the BPO and comment as to why my value is more then 10% different. It's always because they go off my quick sale value and because the BPO never adequately estimates the repairs, or MARKET REACTION. My value is usually lower, not higher, so I cant say I've had the same experience.

You say you made a "relatively minor calculation error that could affect reconciliation" but not if a positive/negative or HOW MUCH. If on your effective date your value was well supported (which by your comments it may not be) then I'd leave it. If this "calculation error" effects value, then I would retract my old report and submit a corrected version, but would not consider data made available after the effective date. However, it wouldn't hurt to include this new listing as a PDF in the report with a comment that this new listing came on the market after the effective data of the report and if the client would like you to analyze the impact of this new data, a new report would need to be ordered with a new effective date. It's up to you how much to charge to analyze this new data, but I'd charge $50-$100 to take a second look at the market.

 

[Kevin Keck]

I generally agree with the Duck. It would help if you could view the BPO to get an idea on where he/she was coming from. I've seen a few BPO's this spring and have not been impressed with their quality. I suspect many brokers, in my market at least, low ball their opinions so they can sell the property quickly, say within 30 days instead of within the client dictated marketing time of 90-120 days. I would correct the calculation error in your original report but probably would not include sales/pending information that became available after the effective date of your appraisal. This is not to say I wouldn't use this information to gain a more insightful opinion of the market. Should this sale be valid it might be a pretty big indicator that your original opinion was flawed.

 

[V. Nightshade]

Thanks everyone so much. You've helped me tremendously. I try to be diligent. This was a difficult appraisal because of all sorts of nuances. Thanks to for reminding me that I didn't see the broker's opinion. I fixed the math error (a pittance) and decided to revise some adjustments. I did revise the report slightly.