Un supported adjustments

[GWISC]

I remember the last review I did on an appraisal. The appraiser used a similar data-crunching program to determine a range for adjustments for the elements of comparison. The appraiser indicated the range for each element, many of which were very wide ranges (if I remember correctly, it seems that the appraiser's data showed the adjustment for a central air unit to be $0 to $8,500). The appraiser chose something in the middle, but did not say WHY that adjustment point was chosen.

The adjustment was probably fine, but there was no discussion as to: 1) why not near the lower end of the range? or, 2) why not at the higher end of the range?.

Example: If I had a data crunch up a range for a central air unit between $0 and $8,000. I would figure out which types of houses the market supported an adjustment at the higher end and which ones were at the lower end. In this case, adjustments at the higher end of the range tend to be for newer houses and higher end quality houses. Older houses in less than C4 condition tend to show contributory value for such elements at the lower end. A simple explanation that the property being appraised was an older house of Q4 quality in between the C3 and C4 condition ratings would have logically concluded an adjustment near the middle.

There was also a wide range in adjustment declarations in the report for other elements of comparison and they were likely in the ballpark for the house that was appraised, but again, no discussion as to why those adjustment points were chosen.

Just like the report should indicate WHY you are giving more weight to one comp than another when concluding your value in the Sales Comparison Approach, a discussion should be included on WHY the adjustment amount was chosen, so the underwriter can determine your reasoning and thought process.

 

[Carnivore]

In the not to distant future you will be able to use this tool . It would not surprise me if the lenders are already using it and beating up Boots om the ground Appraisers.

Google Search

 

[Sadie]

I thinj it is fine to use a program to determine if an adjustment is warranted and the range of that adjustment. You then need to explain how you came up with the number you used for the adjustment. If you already did that, then you can respond with either see Addendum XX paragraph YY and have the option to copy/paste your verbiage. Also, it makes them realize you already did this and to actually read your report.

 

[J Grant]

In the context of real estate appraisal, USPAP (Uniform Standards of Professional Appraisal Practice) dictates that while an appraiser can utilize Automated Valuation Models (AVMs) as a tool to support their valuation, they must always thoroughly analyze the AVM's output and make necessary adjustments based on their professional judgment, considering factors that the statistical model might not capture, to ensure the final appraisal complies with USPAP standards; essentially, AVMs are a helpful data source but should not be solely relied upon for a property valuation

Above the "opinion" of AI on the matter-

 

[Tom D]

So what does an avm tell us about how it got that adjustment, what it looked at, what it ignored, why it did that, what it didn't use, etc, etc,... The answers is 'crickets'
But like no other profession, we have to explain it all for the small fee that we already get.
No wonder i have gone back to my start of fixing and flipping days.
If avm is so good, why do we need realtors to give a listing price, just have CU set the value, period. Just kidding Realtors, hahahah.

 

[Carnivore]

123 I have nothing to offer that hasn't already been suggested

 

[Elliott]

You could send them a George Dell handout and a Bob Keith article:




George Dell article below:

 

[Tom D]

Elliot. Thank you, thank you, and thank you.

 

[Cob]

I had a client ( a large nation wide bank) review my report and state that my adjustments were unsupported. I use Synapse by spark which runs multiple analysis and then i attached their results to my report as support. I also outlined throughout the addendum each adjustment that was applied and referenced which analysis was weighted most. So I am confused, what more is the underwriter looking for?

Maybe they're upset that Synapse by Spark isn't the company that their company is in bed with, ask them what company they're in bed with and I'm sure if you use that company software, then your adjustment will be fine with them!

 

[sputnam]

If your Client is going to require that you 'show your math' ala what used to be called self contained reports.... then your fee goes up.