Solution to contract dilema

[J Grant]

Quote:
Originally Posted by J Grant
May I ask, since we don't need a contract of sale to derive a market value for a subject when it is refinance purpose, so why is it needed in a purchase appraisal, for the value development prior to reconciliation?

Because, like comp 1, it's market data.
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No, the subject is not like comp 1. Comp 1 is a closed sale, and the value development is derived from closes sales. You weight the subject contract like a closed sale comp, so this phased value development would really throw you off your game!

But to appraisers who don't; do that, it would not make a bit of difference. The subject as a pending contract is additional market data appropriate for use in reconciliation phase. This phases assignment makes the market data available, but ensures a level playing field, as it would be clear when and how the appraiser is using the SC price in their analysis , and it would reveal clearly show the narrowness or wideness in gaps between market value opinion derived form the comps and all the other relevant data, and the SC price.

That would not allow the fudged statement that the "SC price is a reasonable indicator of market value", when the large gap between the two clearly shows that is not the case at all"

 

[residentialguy]

No, it is not like comp 1. Comp 1 is a closed sale, and the value development is derived from closes sales.

1. Okay, like the identical pending sale comp that you inspected and know the contract detail.

2. NO you don't just develop value from closed sales. If you were in Washington and the volcano erupted the week prior and the listing and pending prices dropped 1/2 of what the closed sales were a week prior...would you just develop your value from the closed sale prices??

 

[residentialguy]

That would not allow the fudged statement that the "SC price is a reasonable indicator of market value", when the large gap between the two clearly shows that is not the case at all"

That's no different than using outliers as comps, which would be misleading. No one is suggesting to use an outlier as an indicator of value. As professionals, we determine what's a good indicator and what is not a good indicator of value.

 

[J Grant]

That's no different than using outliers as comps, which would be misleading. No one is suggesting to use an outlier as an indicator of value. As professionals, we determine what's a good indicator and what is not a good indicator of value.

Right, therefore the professionals would have no trouble with the phases assignments!

The skippies and number hitters would have tremendous trouble, however. This phased assignment would flush them out, now, they have lots of dark gray areas to hide like cockroaches!

 

[residentialguy]

m2: m2: m2:

Again...you can't withhold market data from your formation/development of value.

We determine what's a good indicator and what is not a good indicator of value to use or not use in the development of our omv, not the phase police

 

[J Grant]

1. Okay, like the identical pending sale comp that you inspected and know the contract detail.

2. NO you don't just develop value from closed sales. If you were in Washington and the volcano erupted the week prior and the listing and pending prices dropped 1/2 of what the closed sales were a week prior...would you just develop your value from the closed sale prices??

Of course value is not derived just from closed sales, however, much of it is. If there was a severe change in market conditions such as you state, that would be so extreme banks would suspend lending (that is what happens in Florida when a hurricane hits and there is significant damage, all lending is suspended for a month or two till people can regroup and see storm impact on market and properties)

However, when there are market shifts in any direction, that should be seen in OTHER pending inventory, in interviews with agents, etc. The closed sales would be adjusted for the decline or rise in market conditions till effective date.

As I said, nothing in the phased assignment eliminates appraiser knowing the SC price and using it in value development, it just is introduced at a reconciliation stage to make it a level playing field and make things transparent. (and to flush out the number hitters)

 

[residentialguy]

Really tired of these typical gov't bandaid ideas of infringement on everyone. Just like HVCC...let's not catch the bad appraisers and destroy them, let's f-up everyone so we can keep them in the system.

You know what, preventing bad appraisers from doing something bad doesn't make them good. If it is determined that the appraiser inflated value, then take away his business, fine him and even jail him. Stop messing with my appraisals.

 

[J Grant]

If your appraisals are fine, you have nothing to worry about! Right now, there is not a good pro active way to flush out the bad guys. It's all retrospective and takes years. This phased method is designed to flush them out, in real time, (or it make it so hard to operate they'll quit or at least slow them down!)

If there had been proactive safeguards in place, we would not have needed the HVCC.

 

[Stone]

If your appraisals are fine, you have nothing to worry about!

That is about the worst reason to back something. I don't even deal with this situation except for once in a blue moon and I can just about guarantee that any rule created to "fix" it (something that really isn't even in need of fixing, IMO) would have consequences for everyone that would be a pain in the neck at best.

I get tired of appraisal rules constantly being written because people either can't do a flippin' purchase appraisal ethically or, more reasonably, there is a perception that they can't or won't. I'd like us to stop creating problems that don't really exist and hitting everyone in the head with a hammer to fix said problem that most already understand isn't a problem for those who aren't ethically challenged. I'd think after the rise of the AMCs most of you would be concerned about unintended consequences, as well.

 

[J Grant]

m2: m2: m2:

Again...you can't withhold market data from your formation/development of value.

We determine what's a good indicator and what is not a good indicator of value to use or not use in the development of our omv, not the phase police

With the phase introduction of contract, you still get to determine what is a good indicator , you will have it avail in reconciliation portion of assignment. Why are you so worried?

The whole point is to flush out the number hitters, and boy, would it. Would love to see them trying to explain why the SC price is a good indicator of MV when it is over 40k their initial value development market value opinion on a 150 range property!

Dang, if only they had that contract price in the first place, they could have dragged in a higher priced sale, not adjust for superior location, and the CS price would be bracketed in adjusted range and they could say it was a good market value indicator!! Now what are they gonna do? Squirm around and have their BS exposed is what!