Sale settled post Effective date, prior to report date

[SteveSpy]

Looking for a little help here.... My mind is kinda mush these days, so Hoping the forum can set me straight and settle a bet!

Quick Scenario:

Unit A is the subject. Listed and sold over asking price in a tight market. Contract price was not supported by the market data and AV came in below PP.
Unit B is a Model Match from the same complex, also Listed for Sale and was pending as of the effective date of the report. Sale B was utilized as a Listing comparable.

Agents are spitting nickels about the "Under Valuation" and have submitted a 'Reconsideration of value' with additional comps (none of them similar) and a few requests such as:

Appraiser to explain why no value was given to "porch" (FYI, the "porch" is the rear common stair where the current owner placed a lawn Chair),
Appraiser states the kitchen updates were completed 6-10 years prior when they were completed 5 years prior. Correct and make value adjustment as needed "

My issue is that on the day after I wrote the report, Unit B settled for less than my AV (Closed at List). The underwriter astutely noted this and said, "Comp 6's closed price cannot be used in this report since it was after the effective date - you can comment on its since closed price but it must remain a pending sale in the report".

The client is requesting I issue a new report including verbiage addressing the sales submitted by the agents as well as their points of contention (porch, kitchen dates). (They are normally a good client, I swear! This is a rarity)

My question is, since the Date of Report will be today, and the Sale is now closed, is it misleading to still leave it as pending? DO I change it to closed as the contract dates (meeting of the minds) pre-dates the effective date? Do I leave it alone in the SC grid but include verbiage stating that the listing is now closed an settled at a value beneath the AV and would have been considered an excellent indicator of value.

****Its driving me a little nutz they they are trying to push value when there is clearly none to push... In fact it looks like I overshot the value by a few percentage points .****

Any constructive advice is appreciated!

 

[TerryRohrer]

It would be misleading to show it as closed on the effective date. I would show it as pending, and I would certainly mention in the comments that it closed as the listing price reported, and I would not change my value. They cannot dictate whether or not you reveal the eventual closing price. The reason there is an effective date and a report date is partially so that your perspective while completing the assignment can be understood. If you inspected on 9/10/01 and completed the report on 9/15/01, surely they are not going to argue that you shouldn't mention the events of 9/11! You know what you knew while you were developing your opinion of value.

 

[Tom D]

if they now order an appraisal update, 1004d, then you could use the pending sale that closed, as closed, on a market grid with that 1004d. but would that sale change the value & by how much? unless you change the inspection date any info after that cannot be now used as if newly changed. they can also order a whole new appraisal. i once told the listing agent to wait 2 weeks for a pending sale to close cause i really didn't have enough comps for a report.
by the way i would never say 'in fact it looks like I overshot the value by a few percentage points' on any media, even kidding.

 

[bnmappraisal]

The underwriter astutely noted this and said, "Comp 6's closed price cannot be used in this report since it was after the effective date - you can comment on its since closed price but it must remain a pending sale in the report".

(I'm guessing this is for GSE financing and not in house, so my answer is based on GSE financing)

I would agree with the UW. The comp, as of EFF DATE was pending, not a closed sale

I have a template I use for this type of situation (feel free to use it if you'd like) and tweak it to your own:
"Note regarding comp X: Between the effective date of this report and the signature date of this report, this listing has gone under contract (contract date **/**/20**). Contract price is unknown at this time."
And I tweak it to pending vs closed:
"Note regarding comp X: Between the effective date of this report and the signature date of this report, this pending has closed (closed date **/**/20**) This was an (Non)Arms Length transaction with *** financing and no unusual circumstances (or describe circumstances)"

 

[Russ Kitzberger]

Yes, you can use the sale data occurring after the effective date to support your analysis. We do it all the time in the property tax appraisal world and the court has held that because these appraisals are always done in retrospect; that they want all the data available considered.

There is nothing wrong with considering data that is available to you as of today pertaining to the effective date in the past. All lending appraisals are done in some form of retrospect even if it is a day or two after the viewing, you can still consider data after the effective date.

The underwriter might be wrong or if they are citing some regulation that prohibits you from using the best data; you should call it out as a jurisdictional exception.

Also see advisory opinion 34; Line 39

 

[J Grant]

Yes, you can use the sale data occurring after the effective date to support your analysis. We do it all the time in the property tax appraisal world and the court has held that because these appraisals are always done in retrospect; that they want all the data available considered.

There is nothing wrong with considering data that is available to you as of today pertaining to the effective date in the past. All lending appraisals are done in some form of retrospect even if it is a day or two after the viewing, you can still consider data after the effective date.

The underwriter might be wrong or if they are citing some regulation that prohibits you from using the best data; you should call it out as a jurisdictional exception.

Also see advisory opinion 34; Line 39

Did you read that the pending sale closed 1 day after eff date a a LOWER price than his appraisal value> So the agent does NOT want it as a closed sale lol ( suddenly it is not the BEST data since it does not support a higher value, which is all they care about )-

 

[J Grant]

Looking for a little help here.... My mind is kinda mush these days, so Hoping the forum can set me straight and settle a bet!

Quick Scenario:

Unit A is the subject. Listed and sold over asking price in a tight market. Contract price was not supported by the market data and AV came in below PP.
Unit B is a Model Match from the same complex, also Listed for Sale and was pending as of the effective date of the report. Sale B was utilized as a Listing comparable.

Agents are spitting nickels about the "Under Valuation" and have submitted a 'Reconsideration of value' with additional comps (none of them similar) and a few requests such as:

Appraiser to explain why no value was given to "porch" (FYI, the "porch" is the rear common stair where the current owner placed a lawn Chair),
Appraiser states the kitchen updates were completed 6-10 years prior when they were completed 5 years prior. Correct and make value adjustment as needed "

My issue is that on the day after I wrote the report, Unit B settled for less than my AV (Closed at List). The underwriter astutely noted this and said, "Comp 6's closed price cannot be used in this report since it was after the effective date - you can comment on its since closed price but it must remain a pending sale in the report".

The client is requesting I issue a new report including verbiage addressing the sales submitted by the agents as well as their points of contention (porch, kitchen dates). (They are normally a good client, I swear! This is a rarity)

My question is, since the Date of Report will be today, and the Sale is now closed, is it misleading to still leave it as pending? DO I change it to closed as the contract dates (meeting of the minds) pre-dates the effective date? Do I leave it alone in the SC grid but include verbiage stating that the listing is now closed an settled at a value beneath the AV and would have been considered an excellent indicator of value.

****Its driving me a little nutz they they are trying to push value when there is clearly none to push... In fact it looks like I overshot the value by a few percentage points .****

Any constructive advice is appreciated!

Just because they ask you to reconsider some data X days after eff date does not mean you have to change areas of report that were perfectly fine. You had it as a pending , leave it as a pending.
The stupid porch and one year difference in upgrades comment are both too minor to materially affect value .

The fact the a pending model match just closed lower than your AV shows you had the MV well supported ,- your OMV was lower than their inflated sale price boo hoo, this shows you were right

 

[SteveSpy]

Just because they ask you to reconsider some data X days after eff date does not mean you have to change areas of report that were perfectly fine. You had it as a pending , leave it as a pending.
The stupid porch and one year difference in upgrades comment or too minor to materially affect value .

The fact the pending model match closed lower than your AV shows you had the MV well supported , it was lower than their inflated sale price boo hoo, an even lower just closed pending proves it...

Hmmm.... My thought was, if I issue a new Date of Report, its essentially a new report. If its a new report, shouldn't all data available today ne taken into account.

 

[SteveSpy]

Thanks to all for the quick responses. So is it proper to leave the sale as pending in the SC and leave the AV as currently written with a detailed note such as:

NOTE: Pending Sale #6 settled for $X on Y date. As the sale was not settled at the time of the original report, it was not considered in the final reconciliation. Had it been settled, it would have been granted most weight. Users should be aware of this new data point.

Porch was not deemed to contribute value as Bla Bla Bla.
Suggested sales 1-5 were not utilized as they are dissimilar due to Bla Bla Bla.

Ugh... this just sits poorly with me. If I had written the report a day later, the AV would have been different (lower) ad Iron-Clad. Am I being misleading by not including the Sale as closed and issuing a new AV, or is acceptable to state the Valuation is as of the effective date , with sales closing after the ED no being considered.

 

[J Grant]

Hmmm.... My thought was, if I issue a new Date of Report, its essentially a new report. If its a new report, shouldn't all data available today ne taken into account.

responding to a revision request or ROV does not make it a new appraisal, it is a continuation of the original with a new , updated signature date...

It is up to you to reconsider your own value when you re open a report.... I doubt I would but it is your appraisal if the pending that closed lower makes you want to revisit your value your call.