Selling Guide Announcement (SEL-2024-07)

[GCAR]

Good morning. I received a revision request this morning from a lender that I have submitted a dozen reports to without any revision requests. I included a Market Conditions Report that illustrated a "Stable" market for the past year and commented on that in the supplemental addendum. Any ideas on why that is being responded to with the below? Thank you in advance.

Revision Reason: Per Fannie updated guidelines; Selling Guide Announcement (SEL-2024-07) dated Nov. 6, 2024, and as of 2/5/2025; we require statistical data to support stated market conditions along with the source of the data. The appraiser to specifically explain how time adjustments are/are not applied and if consideration has also been applied to fluctuations within the subject market over the periods of time being analyzed and/or adjusted for. A home price index (HPI) may be used with comparable sales to analyze and validate the market data to support time adjustments. The market data can also be validated by statistical analysis, modeling, or paired sales. This analysis will determine whether a time adjustment is warranted. Time adjustments must be supported by data and in all instances, the appraiser must provide an explanation for the work performed and cite the data sources or tools used to support the time adjustment or lack of adjustments in the appraisal report.

 

[alebrewer]

They're just asking you to show your work. What tools did you use to determine stable? Regression? Grouped sales analysis? Paired sales analysis? What were the results of the analysis? Do those results line up with your determination of stable? Are your recent sales adjusting higher or lower than your dated sales? A conclusion of 'stable' is no different than a conclusion of 'improving' or 'declining'. They're all conclusions based on data analysis.

 

[chad hampton]

just google chart showing a 2% increase in the prior 12 months cut and paste it. These aren’t wizards you’re dealing with.

 

[J Grant]

Good morning. I received a revision request this morning from a lender that I have submitted a dozen reports to without any revision requests. I included a Market Conditions Report that illustrated a "Stable" market for the past year and commented on that in the supplemental addendum. Any ideas on why that is being responded to with the below? Thank you in advance.

Revision Reason: Per Fannie updated guidelines; Selling Guide Announcement (SEL-2024-07) dated Nov. 6, 2024, and as of 2/5/2025; we require statistical data to support stated market conditions along with the source of the data. The appraiser to specifically explain how time adjustments are/are not applied and if consideration has also been applied to fluctuations within the subject market over the periods of time being analyzed and/or adjusted for. A home price index (HPI) may be used with comparable sales to analyze and validate the market data to support time adjustments. The market data can also be validated by statistical analysis, modeling, or paired sales. This analysis will determine whether a time adjustment is warranted. Time adjustments must be supported by data and in all instances, the appraiser must provide an explanation for the work performed and cite the data sources or tools used to support the time adjustment or lack of adjustments in the appraisal report.

I don't believe the selling guide requires statistical data. The selling guide says to show support. This lender/client is adding that as an overlay.
Use the MLS and run some statistics that support your conclusion.

 

[GCAR]

I used the Market Conditions Report provided by Total from ala mode. Same report I have used for this lender on all of the appraisal reports I have submitted. I have attached a copy of it in case you are not familiar with it. It does have a feature where you can add graphical depictions of the data, but I have never included that because it seems unnecessary if you include the table showing the trends.

 

[DWiley]

Good morning. I received a revision request this morning from a lender that I have submitted a dozen reports to without any revision requests. I included a Market Conditions Report that illustrated a "Stable" market for the past year and commented on that in the supplemental addendum. Any ideas on why that is being responded to with the below? Thank you in advance.

Revision Reason: Per Fannie updated guidelines; Selling Guide Announcement (SEL-2024-07) dated Nov. 6, 2024, and as of 2/5/2025; we require statistical data to support stated market conditions along with the source of the data. The appraiser to specifically explain how time adjustments are/are not applied and if consideration has also been applied to fluctuations within the subject market over the periods of time being analyzed and/or adjusted for. A home price index (HPI) may be used with comparable sales to analyze and validate the market data to support time adjustments. The market data can also be validated by statistical analysis, modeling, or paired sales. This analysis will determine whether a time adjustment is warranted. Time adjustments must be supported by data and in all instances, the appraiser must provide an explanation for the work performed and cite the data sources or tools used to support the time adjustment or lack of adjustments in the appraisal report.

Without seeing the Market Conditions Report that was included, we would all just be guessing as to why they made this request. Like others, i have no way of knowing what was in that MC report, but I can say that I have seen a lot of 1004MC forms where the included data was way to thin to draw any conclusions and/or the data presented actually contradicted the reports' trends and/or adjustments.

 

[alebrewer]

One of the shortcomings of the MC is that it lumps several months together. While not explicitly stated, the very strong implication in the training material proffered by the GSE's is that the analysis needs to be on a monthly basis so that you can more accurately assess the weight of adjustments to the comparables. To wit - your data shows a ~ 5% decline in market prices between the 7-12 and 4-6 periods. But what else happened during the 7-12 period? What if prices climbed during that time? Comp2 sold at the 10 month period. How did month 10 look in relation to the effective date of appraisal?

All that to say, the MC really doesn't help when trying to assess market trend adjustments... it's not granular enough.

 

[Mark K]

The appraiser to specifically explain how time adjustments are/are not applied and if consideration has also been applied to fluctuations within the subject market over the periods of time being analyzed and/or adjusted for.

Apparently they want detailed analysis and data even if you don't make adjustments.

Didn't they used to call those "Self-Contained Reports?"

 

[GCAR]

Without seeing the Market Conditions Report that was included, we would all just be guessing as to why they made this request. Like others, i have no way of knowing what was in that MC report, but I can say that I have seen a lot of 1004MC forms where the included data was way to thin to draw any conclusions and/or the data presented actually contradicted the reports' trends and/or adjustments.

Please see above.

One of the shortcomings of the MC is that it lumps several months together. While not explicitly stated, the very strong implication in the training material proffered by the GSE's is that the analysis needs to be on a monthly basis so that you can more accurately assess the weight of adjustments to the comparables. To wit - your data shows a ~ 5% decline in market prices between the 7-12 and 4-6 periods. But what else happened during the 7-12 period? What if prices climbed during that time? Comp2 sold at the 10 month period. How did month 10 look in relation to the effective date of appraisal?

All that to say, the MC really doesn't help when trying to assess market trend adjustments... it's not granular enough.

Fair enough. What do you consider the Industry Standard for the trend analysis?

 

[alebrewer]

Fair enough. What do you consider the Industry Standard for the trend analysis?

WRT use, prolly Spark/Synapse. Not even sure if DataMaster is around any more. To J's point, your MLS will do an ok job of trend analysis. Then there are several tools available as well. You could always do a bi-variate regression in Excel, just regressing price (dependent) and date (independent) of your market segment...