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

[Joe Flacco]

Spring market is a difficult time to appraise. Once the spring sales close, it is easy.

 

[DWiley]

The main thing to take away from the illustration is that the adjustment for the date of sale doesn't have to be x% per month.

Yes, that is a key point of the illustration. Many apply market condition (time) adjustments based on a linear analysis. But, in most markets, price changes are not linear.

 

[Joe Flacco]

The most leading information available in the spring season is the contracts coming across the desk.

 

[Terrel L. Shields]

But, in most markets, price changes are not linear.

It's the ones that are not that I am asking about

 

[J Grant]

Yes, that is a key point of the illustration. Many apply market condition (time) adjustments based on a linear analysis. But, in most markets, price changes are not linear.

A PRICE change of an invidual property is not linear The linear pattern indicates a market trend. I though market condition adjustment were supposed to be about an increasing or stable or decreasing trend, not prices as a stand-alone for a property.

Market value is the opinion sought which is not the same as a literal price opinion. Unless FF wants to swap them out?

Of course, an individual price might vary from a trend, but how do you track it, and for what purpose? These charts do not tell us how it is done. And it would seem very open to challenge; this comp was adjusted up, then the next one down despite whatever the trend showed.

An individual price can often be higher or lower than the trend, for many , many reasons. Artificially assigning the variance in price to a time adjustment for that individual sale, IMO, is dangerous. It does create an artificial equality in price.

Prices can beeverywheree and often are, even in a stable market. That is why the adjusted comps form a range, not a single perfect price point.

The choice of the OMV within the range does have an element of the appraiser's judgment, but the explanation of why should make sense and be evident in the appraisal.

 

[J Grant]

Yes, that is a key point of the illustration. Many apply market condition (time) adjustments based on a linear analysis. But, in most markets, price changes are not linear.

The market trend of increasing, decreasing or stable is lincear and is reliable because it does take place over a period of time -

An individual price within that trend may not be linear because it can be higher or lower than the trend.

What is the point of adjusting each price individually, then? It also seems almost impossible or very time-consuming if the appraiser does not understand the software rather than running it to satisfy another checkpoint.

Tight deadlines and low fees do not allow the time or the steep costs of a learning curve for a deep dive into spearing out an individual
price from a trend - that is the reality of the business even if the entities want to pretend it does not affect results.

So instead, we will have appraisers buying a program, not understanding it, running it to spit out a chart assigning adjustments to individual prices that may or may not match the trend and may or may not have been an aspect of why it sold for the price it got.

 

[Joe Flacco]

The hard part is when your effective date and the contract prices are the red dots. When it is coming out of that summer-winter range. You don't see it in the data yet but you see it in the contracts you receive.

 

[J Grant]

The idea that a time adjustment like this affects an individual price for a property on any reliable level is absurd.

For example, in a multiple bid same-day offer situation, we can see five different price offers on the same property in one day. How did those price variances have anything to do with time?
Yet whatever price is chosen it would have to be run through software for a chart like this jwith the expectation of a time adjustment or none, either one supposedly affecting the price

The linear adjustment pattern of a market trend over whatever period of months it occurs in the market was the standard because it makes sense.

 

[TerryRohrer]

There is no requirement for an illustration.

This came up on Fakebook yesterday. Apparently, some are reading the following bolded statement as a requirement for an illustration in reports, rather than as an indication that an illustration has been added to the Selling Guide.

"Appraisal market areas
To promote consistency and transparency in appraisal reports, Fannie Mae, in collaboration with Freddie Mac, is updating requirements related to the Market Area analysis of the appraisal report and implementing standardized definitions for the terms “Neighborhood” and “Market Area.” The Selling Guide is being updated to include these new definitions in the Glossary. Additional guidance and requirements are provided for the following:
• Selection of comparable sales;
• Establish a minimum timeframe of 12 months from which the overall market trend must be derived;
• Identify that the overall market trend may be different from the adjustments applied to individual comparable sales;
• Include an illustration of the methodology used to determine specific comparable sale time adjustments for changes in market conditions; and
• The appraiser must report the market analysis that supports both the indicated overall market trend and market derived time adjustments for changes in market conditions.

Effective: Lenders are encouraged to implement these policy changes immediately but must do so for loans that require an appraisal with applications dated on or after Feb. 4, 2025."
https://singlefamily.fanniemae.com/media/40811/display

 

[KHS445]

While I don't appraise properties going to the secondary market, I do a fair share of date of death, divorce, estate, capital gains, donations, tax, etc. appraisals of residential properties. Many of the reports are retroactive to a date a year or more back. Being in a small and very diverse market there are no model matches to consider and sometimes one needs to consider older sales and even more recent sales if they provide additional support. Yes, you need to cover all of this in the reconciliation.

The local MLS does a good job of reporting changes in the average sale price, but that is an all-encompassing calculation, and a couple of million-dollar lake front home sales can throw the average. In Michigan, the State publishes a report that provides the inflation factor for use by the local assessors when adjusting a properties taxable value. The law limits the annual increase in taxable value to the lesser of inflation or 5%, with the taxable value being uncapped in the event of an arms-length sale. While not perfect by any means, it is an independently arrived at number, and I will refer to this information when making time adjustments.