Stip to add specific comp to grid or a different comp within 1 mile of the subject

[residentialguy]

the comp they want me to add would bring the opinion of value well under contract price.

Hmmmm.... if it was correctly adjusted for all the market variances and all contributing factors affecting the sale price, why would it reflect a different price?
Answer: It wouldn't.

 

[Dublin ohio]

Why are some assuming that the OP's appraisal was deficient. The OP has said more than once that closer sales were too inferior. But some seem to insist that there has to be a closer sale and the OP is just ignoring it. Yes you can go back in time and make the required market adjustments. But do we know that the client will accept a dated sale or do they want a current sale. The fact that they provided a Bi-Level that after research shows it has 30% less above grade GLA. Makes me think they pulled it off something like Realquest. Which more than likely includes below grade area in total GLA (It does around here). Which would make it appear "comparable" to subject's GLA.

 

[Dublin ohio]

Hmmmm.... if it was correctly adjusted for all the market variances and all contributing factors affecting the sale price, why would it reflect a different price?
Answer: It wouldn't.

But are those factors going to be the same when comparing a 2 story home to in this case a Bi Level style home. Highly unlikely.

 

[Tom4value]

Need some advice here please.

A lender client who sends me the majority of my assignments sent a stip to add specific comp to grid or a different comp within 1 mile of the subject. To me this seems to "limit the scope of work to such a degree that the assignment results are not credible in the context of the intended use." It also confuses me because the completed assignment resulted in the opinion of value being above contract price, albeit 7k above, and the comp they want me to add would bring the opinion of value well under contract price. The comps I used were 0.8 miles, 1.6 miles, 2miles and 3 miles from the subject and were extremely similar substitutes which also bracketed GLA, adjusted sales and overall adjustment percentages. In short they were the best comps available.

My first inclination was to tell them to stop trying to influence assignment results and pay me for what I felt was a job well done. My problem is that I don't want to "bite the hand that feeds me" and it could be that they have legitimate concerns about surrounding subdivision values that I did not find in my research. Before I get blacklisted by my best client by refusing the stip and telling them that I think adding any other comps from a 1 mile radius would produce misleading assignment results, I wanted to get some other perspectives. Am I making too big a deal out of this or thinking about it wrong? How would you handle or have you handled situations like this? Thanks

I won’t go into details because only you know what the are, not me. I will just comment on the gist of what you are asking.

First, underwriters don’t want you to include sales to hit a number. They want you to because CU spit out a sale and they want you to tie up a loose end, even if it means “killing a sale”.

Second, you have your answer, you do not think the sale was a good comp. Say so IN DETAIL. Reiterate why the comps you used were the best. Only include the sale if it is COMPARABLE. If it is not the strongest, say why. However, never include a sale that is not comparable just because they ask you to. That is misleading and puts you on the wrong side of USPAP.

This client gives you the majority of your work for one reason, they trust you as a good appraiser. Own it and don’t be afraid. If you give a credible response as to why you didn’t use the sale in the report, they will put your response in the file, cross off the issue in CU and move on. Trust me, I do it all the time.

 

[TerryRohrer]

Need some advice here please.

A lender client who sends me the majority of my assignments

The above is the first thing to fix. Their request is more likely than not an attempt to game FNMA's CU system. Wells Fargo/RELs used to play that game often, and now their crooked ways are permeating other players in the market. That is why lenders can get the inside scoop on CU and appraisers can't. Just another strike at appraiser independence, and given the responses above that say, just do it, is an effective approach.

 

[Surf Cat]

Why are some assuming that the OP's appraisal was deficient. The OP has said more than once that closer sales were too inferior. But some seem to insist that there has to be a closer sale and the OP is just ignoring it. Yes you can go back in time and make the required market adjustments. But do we know that the client will accept a dated sale or do they want a current sale. The fact that they provided a Bi-Level that after research shows it has 30% less above grade GLA. Makes me think they pulled it off something like Realquest. Which more than likely includes below grade area in total GLA (It does around here). Which would make it appear "comparable" to subject's GLA.

Well.....the obvious that the lender is not convinced. Maybe lacking commentary because again, the lender sent a sale to stick in the report. Also, based on the OP's stubborn stance, they felt they provided enough evidence of market value with sales 1.6, 2, and 3 miles away concentrating on the construction of the subject dwelling as opposed to location. Now, I don't know the OP's area, but over my way, those are different worlds in median prices, schools, etc. Maybe the OP didn't input location adjustments?

I don't think the lender would use Realquest.....but collateral underwriter for sure. Did the underwriter thoroughly analyze CU to match up the subject's characteristics? Heck no....they just saw something similar in GLA, not even considering part of it was basement and that it had a pool and threw it his way. All the more reason to search on his own and go back in time to find something more similar within a half mile.

The OP's analysis did not convey the challenges and convince the lender that his $7k over list opinion of value is solid for them to loan on. That's where the rubber meets the road.

 

[Dublin ohio]

Well.....the obvious that the lender is not convinced. Maybe lacking commentary because again, the lender sent a sale to stick in the report. Also, based on the OP's stubborn stance, they felt they provided enough evidence of market value with sales 1.6, 2, and 3 miles away concentrating on the construction of the subject dwelling as opposed to location. Now, I don't know the OP's area, but over my way, those are different worlds in median prices, schools, etc. Maybe the OP didn't input location adjustments?

I don't think the lender would use Realquest.....but collateral underwriter for sure. Did the underwriter thoroughly analyze CU to match up the subject's characteristics? Heck no....they just saw something similar in GLA, not even considering part of it was basement and that it had a pool and threw it his way. All the more reason to search on his own and go back in time to find something more similar within a half mile.

The OP's analysis did not convey the challenges and convince the lender that his $7k over list opinion of value is solid for them to loan on. That's where the rubber meets the road.

Maybe the OP did do all of the things you suggest they didn't. Nobody but the OP knows. As far as the lender using CU sales. If that is true. So much for ANSI etc. They send a sale of different style that included below grade GLA. If that is in their database that way. It has been reported wrong in a report somewhere. As far as I know. CU doesn't mine county records or third party sources. Their info is from reports submitted. So it would seem that they are not enforcing ANSI. I can only remember one time that a lender has thrown CU at me and that was early on when lenders were misusing CU. Every request I get to consider additional sales has either been the very rare rov. Or stated that they were from a third party source (usually Realquest).

 

[Dublin ohio]

Also, based on the OP's stubborn stance,

Maybe the OP is stubborn because they did do their due diligence and they know it. Sorry if I tend to take the appraiser's side in some of these threads. But I try to at least give them the benefit of the doubt.

 

[RCA]

Could you be more proactive and responsive to the client? It seems your ego is preventing good business practices.

I have included a comparable property within a 1-mile radius to address your request. This property has been added to the analysis, comparing it with the subject property and the other comparables initially included in the report. Although this property is closer to the subject property, it differs significantly, which could impact its suitability. These differences include [state differences], which affect its relevance. It has been included to address your concerns, but based on my professional analysis, the initial comparables selected provide a more accurate reflection of the subject property’s market value. These initial comparables better bracket the Gross Living Area, adjusted sales, and overall adjustment percentages, ensuring a credible and reliable valuation.

This approach demonstrates responsiveness to the client's request while maintaining the integrity of the appraisal report.

A very good appraiser can always compare one property sale transaction to another, - although the adjustments may have to be relatively large.

Large gross adjustments carry with them a percentage error. The larger the gross adjustment (difference) the greater the error. The same goes for estimating the residual for the subject - the larger the residual, the larger the probable error. Because of the latter issue, you need a good regression tool to give you a high R2 based on the measured attributes, such as GLA, room counts and other numerically based features. If you can account for 80% of the price via measured features, that leaves 20% where you have to estimate the residual for the subject - and a +/-10% error on that (reasonable) times 20% is +/-2% accuracy. And to do this, you have to perform this balancing act: Obtain a high R2 without overfitting, i.e. Obtain a high R2 and CVR2 (cross-validated R2) - and that takes knowledge of real estate and statistics, plus probably years of experience. So, it is quite possible there is only one appraiser in the world that can and does to this - myself. But, the infrastructure does not exist to pay a reasonable fee for the work that goes into such reports. --- So, the problem with the method is a problem of time, - more or less.

 

[shrubberyvaluation]

If you are using a FNMA form you are certifying you are using the best comparables. Putting a sale in there with no weight kind of goes against that certification. So you have to decide with business decision or going against the certs.

An older sale in the immediate market area would be the safest approach. Its still the best locationally, physically etc.