This is a pretty niffty detailed chart for finding time adjustments, we are done.

[NC Appraising]

Never heard of that one before.

Dunno why. Could be afraid of buyback

Here is the rejection. Fwiw, I called the uw, and he commented on the two mile comp rural thing being part of CU? I've heard that before. Dunno if it is accurate.

Subject: Comments to Service Provider
Message: Revisions requested: 1. Page 1, Neighborhood: The Appraiser to explain the Comps provided being 3 to almost 11 miles away, would this be considered a Suburban or Rural neighborhood, regardless of being low density or 40% built out. A neighborhood is also Not defined more generally as "a group of complementary land uses", but as having a local community within a Town or City to make it a suburban neighborhood, nothing to do with land uses. Please also consider that even if rural, the Comps can still be in a competing rural neighborhood.

Fwiw, it's a toss up. Could have went rural or suburban. On the line.

 

[J Grant]

Even without the GSC guidance... looking over some of these appraisals where the adjusted prices are well below or above all the gross sales prices. It's "what the heck?"

Appraising is not an exact science as we all know. There's a degree of subjectivity and estimation. That said, there has to be some common sense in one's application as you say, in deriving an opinion of value. Making month to month, different percentage market adjustments, seems to defy common sense.

Don't throw the baby out with the bath water. Make the offenders whom are making no Market adjustments, get with it or get out.

The market in my area, in most cases, has been stable overall for over a year, so what time /market conditions adjustments are we supposed to make ?

There are always individual high and low-price sales within any market cycle, as well as the fact some properties will conform more to the trend than others.

I sold RE in NYC and in FL - wrt negotiating prices - I can not recall a negotiation where one of the parties said, "Gee, we better change the price because it is X % under or Y% over the trend line."
Negotiations are messy and personal to the individuals, imperfect prices follow.

 

[alebrewer]

I sold RE in NYC and in FL - wrt negotiating prices - I can not recall a negotiation where one of the parties said, "Gee, we better change the price because it is X % under or Y% over the trend line."

The change in mean/median price trends over time does not occur because buyers and sellers look at a trend line. The change occurs due to changes in demand and supply. You're either being intentionally obtuse, or you really don't get it, J.

 

[DWiley]

It will be interesting to see how many appraisers jack up their adjusted sales range by blindly following the GSE guidance without using any common sense in their application of the adjustments.

How would/could "blindly following" the guidance, which boils down to just showing the analysis long required by SR 1-3 of USPAP, "jack up" an adjusted value range?

 

[Sadie]

I don't know any market but the one I work. The appreciation or depreciation is not in a straight line, it flucuates, usually with the time of year. So the market conditions adjustment will typically not be XX% per month. But what I do believe the reason for the new requirement is that appraisers are just making up the adjustments without explaining why they made the adjustment and how it was derived. Increasing market and 5% per month by itself is not a supportable adjustment.

 

[Surf Cat]

The market in my area, in most cases, has been stable overall for over a year, so what time /market conditions adjustments are we supposed to make ?

Based on the graphic in the op and subject of this thread, what has been proposed is to make a Market adjustment at "each point" of the comparable sales.

I pretty much do what Joe Flacco has stated in Post Number 8. To me, it's more representative of the market. Of course, "it depends" on the subject property as well as..... should I say it? Ahh screw it..."location". As our esteemed colleagues have pointed out, market trends will differ from starter homes to luxury estates.

I just think the proposal is going to make matters worse.

 

[Mike Ault]

I believe I'll wait until a consensus is reached on the best path forward, and then see if I can reverse engineer it in Excel. It's certainly not going to be the end of the world no matter where the dust settles over this issue.

 

[J Grant]

Based on the graphic in the op and subject of this thread, what has been proposed is to make a Market adjustment at "each point" of the comparable sales.

I pretty much do what Joe Flacco has stated in Post Number 8. To me, it's more representative of the market. Of course, "it depends" on the subject property as well as..... should I say it? Ahh screw it..."location". As our esteemed colleagues have pointed out, market trends will differ from starter homes to luxury estates.

I just think the proposal is going to make matters worse.

If it is a proposal and not mandatory, okay

If they make it mandatory, that is another entirely different thing.

It is insane to make the price of each comp adjusted to some point of conformity on a grid - because it focuses on that individual price rather than providing a supported trend and applying the trend as an adjustment. to the sale

I can understand the application and have used it to apply to an older dated sale comp, for example, 10 months old , where the market appreciated its first 4 months and then was stable the remaining 6 months. Other than that it can skew values imo.

And the FHFA comment that appraisers are under-applying time adjustments in some areas, resulting in under-valuations, is ridiculous, and if the entities are going to red flag us on that , I honestly don't know what to say at that point.

 

[alebrewer]

How would/could "blindly following" the guidance, which boils down to just showing the analysis long required by SR 1-3 of USPAP, "jack up" an adjusted value range?

Easy. Example: data set is really too small to drill down to accurate month over month trends, but that's the guidance proffered, so that's the guidance followed. IRL, this made up data set shows a modest linear trend of ~ 3-4% annual appreciation. Due to a lack of observations combined with more than typical outliers, though, the data for month 8 shows a -15% depreciation rate. Appraiser follows the guidance and adjusts the sale that contracted 4 months ago (let's call it Comp2) by (-)15% for market trend. Other sales in the grid have adjusted values of ~ $200k to $220k. Comp2 has an adjusted value of $180k. He/she now has a 'jacked up' adjusted range due to over adjustment for market trends based on the guidance proffered by the GSE's.

 

[Surf Cat]

I believe I'll wait until a consensus is reached on the best path forward, and then see if I can reverse engineer it in Excel. It's certainly not going to be the end of the world no matter where the dust settles over this issue.

The Sheepdogs are the GSE's and appraisers are....you guessed correctly.....the sheep.