Solution to contract dilema

[CANative]

You proposal says to the world "appraisers cannot be trusted."

 

[residentialguy]

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!

Good grief. Really?? ***sigh***

Any report that is that skewed can easily be flushed. Review it and bust them. If you want me to do 2 appraisals, fine. Got money? You'll need it.

 

[J Grant]

A field review or 2 appraisals would be very costly. This is a low cost way of busting the number hitters .

 

[J Grant]

You proposal says to the world "appraisers cannot be trusted."

I hardly think "the world" has any idea what transpires between lenders, AMC's and appraisers.

 

[residentialguy]

A field review or 2 appraisals would be very costly. This is a low cost way of busting the number hitters .

You are asking for 2 appraisals. One for this market data (no subject data) and one for another set of data (that includes it).

 

[J Grant]

Every appraisal actually has two phases of value, or two "appraisals" if you will. First phase, we provide he SCA and CA and IA indicators of value.

Then, another market value opinion, which can be the same or differ from the SCA value indicator because it includes the reconciliation of the approaches, AND any additional considered data...the preprinted language on the URAR in he reconciliation box references the culmination of the SOW as arriving at the market value opinion, which can differ from the SC opinion. Of course we can add our own narrative to expand comments to include contract analysis.

 

[residentialguy]

How many here have stated a different value under reconciliation (bottom of page 2) from the indicated value of the SCA right above it?

 

[Michigan CG]

Working on a SFR where the contract is $115,000. It was not on the MLS and is a private sale. I am thinking I will come in around $60-$70,000.

Had a commercial assignment a few weeks ago where the contract was $350,000 and I came in at $350,000. Commercial is many times based on income with support from the SCA. My range of value for the subject was $340-$400,000 considering the two approaches. The $350,000 made the most sense and was supported by the contract which is a part of the market considering the marketing time of the subject in this case.

I am working on two purchases with no contracts provided. I don't need, or care if I have a contract but if I have one I will consider it. If I have questions then I will abide by 1-4 and make some phone calls or visits.

 

[Michael S]

I have one client, a REIT that I have done several purchase appraisals for. The properties they buy are rarely listed for sale and they don't provide the purchase contract. Months later when the sale closes I've found that I'm generally lower than what they actually paid (per SEC filings). However as a REIT they can afford to overpay since they need to put their money somewhere and they're collecting fees on each transaction.

If the purchase contract is within the final range unless there's some very compelling reason I'm going to reconcile to the contract price. I'm not good enough, and the data certainly isn't good enough to say the value is exactly 1.2% lower than the contract price.

 

[Mike Kennedy]

I hardly think "the world" has any idea what transpires between lenders, AMC's and appraisers.

All evidence to the contrary;

Listing Agent "but i got a contract price - hit it or die
Selling Agent "but i got a contract price - hit it or die
Loan Originator "but i got a contract price - hit it or die
Underwriter "but i got a contract price - hit it or die
Lender independent or captively-owned AMC/3PA "but i got a contract price - hit it or die
Seller "but i got a contract price - hit it or die
Buyer "but i got a contract price - hit it or die
GSE's "but i got a contract price - hit it or die

Dodd-Frank "all parties with vested interest may deluge appraisers with multiple snowstorms of coercive "reconsideration of value demands" when the OMV does not meet or exceed the contract price. All parties with vested interest may file state appraisal board complaints for essentially any reason up to and including when appraisers do not hit the Bull$eye. That includes REITs and other lenders who buy loans who are NOT the Client - including loans issued 5-10 years earlier.

P.S.

"Lender Responsibilities Pertaining to Appraisal Report Review"
When a new appraisal is required for a mortgage that a lender delivers to Fannie Mae, the lender must perform an underwriting analysis of:
• the appraisal report to ensure that the report is of professional quality and is prepared in a way that is consistent with Fannie Mae's appraisal standards.
• the property based on the appraisal;
• the property’s acceptability as security for the mortgage requested in view of its value and marketability;
• the current contract for sale for the subject property for purchase money transactions;
• the current offering or listing for sale for the subject property for both purchase and refinancing transactions, if applicable;
• the current ownership for the subject property for both purchase and refinance transactions;
• the sale or transfer history of the subject property, and comparable sales for both purchase and refinance transactions;
• the sale(s) of the subject property and the sale price trend in relation to the appraiser’s opinion of value to confirm that they are reasonable and representative of the market."