The word "Average" in the improvements section - possible bias?

[Terrel L. Shields]

The terms/words by themselves are merely descriptive words

Agreed. "Average" in the context of our reports is invariably a comparison with the comps and competing properties. Sure, we have houses between 800 SF and 6,000 SF. But the "average" home is a fixable number - and by our own experience, I can aver that the "average" home in the "average" subdivision here is about 1,500-1,800 SF without even calculating the exact number. Likewise, the "average" age is probably 15-18 or so years old. We have a lot of new homes, we had a lot of new homes in 2004-2009, and the rest are older. Again, we could calculate that number precisely but heuristically we, by experience, know when the construction booms were and what the populations were in decades past.

 

[djd09]

The regulators have made crystal clear that lenders and those who purchase loans from lenders can be found to be in violation of fair lending laws if they rely on appraisal reports that they know, or should have known, are discriminatory, based on the language used in those appraisal reports.

See example G page 10 - https://www.fhfa.gov/sites/default/files/2023-07/AB 2021-04 Enterprise Fair Lending and Fair Housing Compliance.pdf

Taking action to prevent that risk for the lender or the investor is simply good risk management.

so the lender will have to buy back because of the word average...i cant stop laughing

 

[djd09]

if i ask you what is the average appraiser...would you understand that means old white and male

 

[J Grant]

You keep saying they are not subjective - so then give us the objective definition of "average" that is universally used by appraisers. You cannot do that because as this very thread has well illustrated different appraisers use that word to mean different things.

You asked - How are we supposed to make narrative comments about a sales Comparison without using words to compare the properties or areas? I have already answered that question multiple times. All that is necessary is to provide explanation of how you are using that term.

If it were me, I would simply include definitions of those terms in my report, and then rate according to those definitions. Given that you think good, average, fair, etc. are such well understood terms, it should not be difficult to provide definitions.

How come fannie and Freddie did not think those words were a subjective problem for the prior decades up until now?
It is not a problem to provide a context for these words, however, average is understood by most people to be what it means -

 

[DWiley]

How come fannie and Freddie did not think those words were a subjective problem for the prior decades up until now?
It is not a problem to provide a context for these words, however, average is understood by most people to be what it means -

I think you of all people know the answer to that first question.

As to the second line, if everyone knows what it means, then why do appraisers use it so differently? If you were appraising a new house, would you describe the carpet as being in "average" condition, because it is average for a new house? or, would you say the condition was "new" or "very good"? Whatever your answer, about half the appraisers disagree.

 

[J Grant]

I think you of all people know the answer to that first question.

As to the second line, if everyone knows what it means, then why do appraisers use it so differently? If you were appraising a new house, would you describe the carpet as being in "average" condition, because it is average for a new house? or, would you say the condition was "new" or "very good"? Whatever your answer, about half the appraisers disagree.

I think an appraiser who does that is incompetent, and maybe their other work should be looked at - I do not describe carpet as "average" in a new house - do half the appraisers actually say average?

IMO, when the AMCs;s (sorry ) have a stake in the selection for fast, cheap, rushed ( easy to write average for all ), it matters.
While it might be a sign of churn out fast , or incompetence if the rest of the appraisal is credible and supported, wrt chose good comps and adjusted well, etc., did it really matter that the appraisal used to average to mean similar to other new houses?

It is drilling down on petty nonsense to make it look like lenders and GSE's are addressing a nonexistent "problem" of subjective words - USPAP addresses the appraiser working in a manner that is impartial and objective, USPAP never said the words themselves had to be "objective" ( and how many words at the end of the day are objective? ) English is a language, not a computer code.

Again, providing a context statement is no problem, but it is one more thing to add -and if a client or reader does not like the statement, then what -folllows after that?

 

[Dublin ohio]

I only use "average" etc when describing condition of the various elements. I provide context in the description of improvements. Will also use it when commenting on average sale or list price which provides context within the commentary. Average list or sale price is not "subjective".

 

[DWiley]

While it might be a sign of churn out fast , or incompetence if the rest of the appraisal is credible and supported, wrt chose good comps and adjusted well, etc., did it really matter that the appraisal used to average to mean similar to other new houses?

From a lender perspective, the sole purpose of the appraisal report is to assist in risk management. The actual condition of a home certainly affects the default costs if the lender/investor ends up owning the home. So, yeah, communicating the actual condition is important to users, even if the value is credible.

If an appraisers says that a home in poor condition is in average condition, simply because it is in the same condition as the comps, then that is effectively negating an important data point in the risk decision.

 

[Terrel L. Shields]

Carpets? If one states the age of the carpet is that more informative? Maybe not. A 20-year-old carpet lightly used and shampooed professionally every 2 years is likely to look much better than a 4 year old carpet with heavy traffic and not cleaned well...whatever. So, what metric will you use to rank a carpet? Some appliances from the 70s are still functioning. Some appliances installed in 2014 are already done for.

 

[djd09]

the purpose of the appraisal is to protect the lenders...then they should just write it up and we can sign it