ROV - "add comments why you didn't hit the sales price".

[residentialguy]

WHO CARES ?

Buyers are allowed to pay whatever they want. They pay what they decide before we are called in to appraise. So we can't ask why they paid over MV, since MV is our opinion of the property, and they had no idea of that opinion when they negotiated price.

I was being a bit sarcastic when I wrote who cares...but the point is, we are not detectives engaged to find out why a buyer paid what they did. We are engaged to develop our opinion of market value. We can analyze a contract , but relevant as did contract contain atypical terms/terms affecting price. We are not lawyers and we are not forensic investigators into a past price negotiation we had no part in.

While it is informative for a client to know a reason why a buyer paid what they did, such as a concession, or a bidding war, or non AL terms etc, sometimes there is no clear reason. which is why in our comment, best is to reinforce why our OMV is supported, and that their CS price could simply reflect individual negotiation or market conditions.

The reason why these folks paid X and their motives for a CS price is really not that important , because whatever the motivations of an individual buyer, the appraisal opinion of MV derives from the assumed "sale" between the "buyer and seller" as typically motivated, at terms defined, in the MV definition. (of course we consider the CS price, to head off the accusation about ignoring it )

Lenders care and so does your SOW.

 

[bnmappraisal]

Why did they pay over mv?

Good to see you back on here RES

In that particular one, my OMV came in at $850k
My client (direct lender) told me they were renegotiating the contract price and amending it to my OMV
Guess that ended up falling through for whatever reason because I just looked at the listing and ... it's now listed at $559k
From the current listing "This lot actually has 2 acres, but the county has the paperwork and is currently processing for the separation of the acres. **THIS LISTING IS FOR THE HOUSE PLUS 1 ACRE ONLY**. " New Roof with Full List Offer""

 

[J Grant]

just a thought. you have brought a very interesting point of contradiction. the sc price is not a market value, it is an offer of value. so the standard comment that we may have been sharing maybe needs to be changed to
The subject's current contract offer price of $110,900 falls within the above range and can therefore be considered to be a reasonable expression of being 'Market Value as defined'.
a couple of different wordings just changed the thought that we appraised the sales contract.
sc price only becomes market value after settlement, yes.

The sales price is not an offer of value, it is a price offer.

Market value is an opinion ,(an opinion of value per USPAP is an appraisal. ) Non appraisers can offer an opinion of value, without an appraisal for their opinion.
Whether one uses the phrase a reasonable expression of market value, or market value, saying a SC price falls within an adjusted range makes it sound like we are appraising the contract. We are not appraising a contract, we are appraising a property. The sales contract of course can have a relation to our opinion of value, and we can say the SC as an arms length indicator supports our opinion of MV.

 

[TerryRohrer]

Lenders care and so does your SOW.

If the lenders care, they should ask their borrower, as they have contact with them, we typically don't. And where does the SOW require an appraiser to psychoanalyze a borrower? To do what you are suggesting would require tax returns from buyer and seller and a staff of accountants and tax attorneys and psychiatrists, etc, to interview everyone in the lives of the buyers and sellers and see if their decision has tax ramifications and was influenced by those and if they have personal issues and their decision was influence by those. And none of these have any bearing on market value and none have any place in the SOW for an appraisal assignment for a lender. "Analyze the contract" does not equate to "psychoanalyze the buyer and seller and everyone in their lives."

 

[J Grant]

just a thought. you have brought a very interesting point of contradiction. the sc price is not a market value, it is an offer of value. so the standard comment that we may have been sharing maybe needs to be changed to
The subject's current contract offer price of $110,900 falls within the above range and can therefore be considered to be a reasonable expression of being 'Market Value as defined'.
a couple of different wordings just changed the thought that we appraised the sales contract.
sc price only becomes market value after settlement, yes.

Example :we appraise a same property : Case A) for a refinance , : Case B) owner lists it on MLS and gets a sale contract. In both cases, the comps adjust to a range of 580-600k. In both cases we opine our market value opinion as 590k.

The reconciliation statements would be the same for both , except for additional comments for the contract relevance the appraisal B)

Case A)" Four comps from the subdivision were used. The subject is more similar to comps 1 and 2 m which have the least adjustments made, with comp 3 and 4 supporting the reconciliation of the opinion of market value of$ 590,000. "

Case B) : " Four comps from the subdivision were used. The subject is more similar to comps 1 and 2 m which have the least adjustments made, with comp 3 and 4 supporting the reconciliation of the opinion of market value of$ 590,000. There is a pending sales contract for $590,000 , it was listed on MLS and the contract price of $590,000 provides additional support as an arms length market indicator"

 

[J Grant]

The subject's current contract offer price of $110,900 falls within the above range and can therefore be considered to be a reasonable expression of being 'Market Value as defined'.

The subject's current contract offer price of $110,900 falls within the above range and therefore provides additional support for the reconciliation of market value opinion of $111,000"

We can use a CS price as support for our OMV, if appropriate-above avoids saying the SC price is market value, or is considered to be a reasonable expression of market value. We are not appraising the SC price. Statements to that effect imo might cause a problem for an appraiser later .

 

[J Grant]

The purpose of this summary appraisal report is to provide the lender/client with an accurate, and adequately supported, opinion of the market value of the subject property.

It is not:

The purpose of this summary appraisal report is to provide the lender/client with an accurate, and adequately supported, opinion of the market value of the subject 's sale contract price.

 

[glenn walker]

Note sent to an- appraiser on fee panel in 2015 -- Ms Appraiser --Seems like every time there is a purchase transaction needing an appraisal, you come in just above the purchase price and even though its not prohibited and in some cases its warranted-when 8 out of the last 10 reports delivered to us were all approximate 1% to 2% above the Purchase Contract Price and it caught one of our QC reviewers attention. She asked us what we thought about it. Could you please explain why you did not just stop at the Contract price if you believed your comparables supported it ? The one last week at $300,000 and your OMV at $303,000 seemed to have raised some questions.

Reply: From Appraiser-
Paraphrased : To whom it may concern :
My mentor trained me to never be to exact and I do not want to look like I am appraising the Purchase Contract Price or ever - agreeing with the Buyer and Sellers. Therefore- if my final reconciliation agrees with the Sales Price I add 1% to 2% to value and it's minimal and does not over-inflate my value and in a strong up market it gives me a head start to keep up with prices. I also did the same thing when prices were declining I came in at 3% to 5% below Contract Price so I would be ahead of the decline. Is this a problem ? because you guys have never cut my value or challenged my values and everyone seems very happy with my work. Please advise me if I need to change my methodology or if it's not correct . I need the work and do not want any problems.

Angry Cat to other Reviewer- I can see this is going to be another wonderful day in Loan Production Appraisers Land maybe we should go have a three martini lunch : )

 

[Andee]

If everybody was leaving CA, the contract price for a 1475 sf home wouldn't be $835,000

It would be if it were on the beach in La Jolla, up on the cliffs or Malibu, or anywhere that gives you a view or is adjacent to the beach/ocean.

 

[Chandler]

It would be if it were on the beach in La Jolla, up on the cliffs or Malibu, or anywhere that gives you a view or is adjacent to the beach/ocean.

Yeah if you find that in La Jolla, send me a DM I'll buy it. I may even spend a little more and get a slightly larger house. Love the area.