• Welcome to AppraisersForum.com, the premier online community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Solution to contract dilema

Status
Not open for further replies.
Peter, I agree with much of your post and it was astute about deficiencies present..

However, regarding time constraints and whether lenders would actually do this...this is what happens in a reconsideration of value. Somehow, lenders and AMC's find plenty of time to send an appraiser additional data for a report that already was provided to them with a market value opinion when the SC price was not met!
 
A real appraiser would not see a dilemma regarding a sales contract.

One of your sillier notions J.
 
Terrel L. Shields said:
To arbitrarily say, I will go with the average ($102,000) with a $104,000 contract staring you in the face is to say you are capable of a precision of measurement that is not borne out by your data.

Does it "bias" you? Of course! You are involved in a heuristic exercise that requires a bias (judgment). The idea that we have no bias reduces the appraisal correlation and reconciliation process to a mechanical exercise.
Click to expand...



[URL="http://en.wikipedia.org/wiki/Heuristic"][URL="http://en.wikipedia.org/wiki/Heuristic"][URL="http://en.wikipedia.org/wiki/Heuristic"][URL="http://en.wikipedia.org/wiki/Heuristic"][URL]http://en.wikipedia.org/wiki/Heuristic[/URL][/URL][/URL][/URL][/URL]


The term "credible" becomes a lot easier to understand when one perceives and accepts the nature of the OPINION we provide.


Markets are foamy. Price point indicators are measurements of particles that could have been either here or there. By nature, the participants that measured it are biased. Any price point opinion is acknowledgement of the probability that the market value particle appears at point x. So analysis of the contract price point is always relevant to reconciliation as it represents a measurement within the patch of foam you have reduced the appraisal problem to. It is significant because an observer measured it. It is particularly relevant because it is a measurement of the same particle you are trying to measure. The only thing to reconcile is confidence in your measurement versus theirs.

Incompetents, liars and cheats, buyers, sellers, lenders...pretty much any market participant including us contributes to chaos within the market that exists. Note the difference from; they contribute to the chaos that exists in the market. We are expected to analyze the market that exists, not attempt normalization to a "market" which magically exists independant from its inherent nature. To me, that implies regulation...and when people ask what I do I don't respond "Regulator".


It is just as credible to present an opinion without considering their measurement but isn't that exactly what the intended use of an appraisal for a purchase transaction is? This guy is asking us for money with x as collateral...is their valuation of x credible?
 
Last edited:
CANative said:
A real appraiser would not see a dilemma regarding a sales contract.

One of your sillier notions J.
Click to expand...

Tend to agree. I've been low on purchase appraisals in the past and am pretty positive I will be in the future. Have one CU client that actually sends a "we understand and thank you for your honest work" note when the report is below contract.

Think you're looking at this from the wrong end. Until the lending side starts appreciating the true value of the collateral they are lending on, withholding the contract from the appraiser will change nothing.
 
So you have to make some judgment as to whether or not the subject is somehow more similar to the lower end than the higher end. To arbitrarily say, I will go with the average ($102,000) with a $104,000 contract staring yoiu in the face is to say you are capable of a precision of measurement that is not borne out by your data.

I doubt any competent appraiser would "arbitraly go with an avg of 102k" . A MV opinion is not supposed to be a default average of the comps. The most probable price is not the same thing as an average price. If a 104 k contract was relevant and supportable and value without it was 102k, surely most appraisers would come in at 104k. If an appraiser comes in 2k below, there should be a very good reason, not an arbitrary one.
 
The contract, if vetted and determined to be "clean," is strong enough market data to support a point value opinion if it coincides with the market value indicators already developed. MV is best expressed as a range because no two properties are ever the same (because location can never be the same) but most lenders want a point value opinion instead of a range opinion.

The contract is GREAT for that. Who could reasonably argue the point?
 
I must have said, hundreds of times, in many posts, that having a SC price and contract is of benefit to the honest, competent appraiser.
They (we) are not the problem.

The phased providing contract is to prevent the legions of number hitters/deal facilitators from being able to do what they do undetected. If they were a small minority, would not be a problem, however that is not the case. My estimation is they comprise 50% of working appraisers.

The phased release of contract would not hurt the honest, competent appraiser in any way, shape or form. They could still have it to review in the reconciliation phase.

It would create havoc however for the number hitter , as not having contract until after they had developed their MV opinion , aka, having it provided only afterward for a reconciliation of value, would greatly affect how they operate, making their usual tricks transparent.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at AppraiserSites.com
Back
Top