Unadjusted values don't bracket the subject's value

[J Grant]

The cert says "most similar". It doesn't mention bracketing.

If the appraiser, such as in OP example, uses all superior comps and adjusts down, then they did not use the most similar - bracketing means lazy or agenda-driven appraisers have to search for the most similar sales- if is not be in the certs but many lender clients ask for it or will send a report back that is all up or downward adjustments -

The reason for bracketing is it is a very good and reliable way to find the value, what the market is paying for same/most similar, and then inferior and superior.

 

[George Hatch]

Bracketing by features/physical components of a property has its place, and then later in the process, bracketing by price has a place as well, though the first is more important

If I have "more similar" properties then what utility does presenting less similar properties in the report add to my analysis?

There's a distinction to be made between actually analyzing the market from the outside-inwards vs the final comp selection we present in our reports. The macro analysis is supposed to occur prior to the final selection.

These other arbitrary machinations contribute to the fallacy that the appraisal hinges solely on the 3 or 5 sales presented as comparables in the report, and that all we have to do to get a different value conclusion is to swap out a couple of those comps in favor of other sales with different pricing.

The report conveys the manner and extent of the development; it doesn't drive the development.

 

[George Hatch]

I started out with an MLS query that resulted in 35 sales and I narrowed that down to 8 sales to drive and then narrowed that down to 4-5 sales for my report. In other words, I actually analyzed to one degree or another all 35 sales - all of which contributed to my selection of and provided context for my analysis of the final 4-5 sales that I presented in the report.

If I say that in a report and some checklist complains about bracketing, how are they going to frame their rationale? That I somehow ONLY analyzed the sales in the SR2 report and didn't include any bracketing in my SR1 analysis? Because no matter what, "most similar" still means "most similar", and directly conflicting criteria undermines that certification.

 

[ZZGAMAZZ]

I just say due to the subjects condition, post adjustment bracketing only. Never had a problem.

I’ve always believed keep it short and sweet. Don’t use paragraphs when a sentence will do.

But I’d prefer to find 1 POS comp.

I agree 100% with your perspective, but in order to create a paragraph when a sentence is sufficient:

Does one need to consider the "stigma" of the subject value because it's condition is inferior compared to even the lowest comparable sale price throughout the market...or is that factor already baked into the OV? (not sure if I am expressing myself well, possibly because the question doesn't warrant a response, although I am asking sincerely...)

 

[ZZGAMAZZ]

The report conveys the manner and extent of the development; it doesn't drive the development.

Sir, your comments are often so eloquent that I personally am humbled, sometimes as though you are describing a trade beyond my capacity to internalize. Wow.

 

[ZZGAMAZZ]

Have you ever appraised a really bad REO home where the value was basically lot value? I think my lowest appraisal ever was $5,000 lot value for a gutted, boarded up, torn up home.

T.H., Your comments "might" pertain to a scenario that I just encountered: a large, good condition luxury SFR with a totally-gutted interior down to the frame because of a comprehensive interior renovation that ceased when the owner's business failed, with the "As Is" valuation being conducted for a BK. I'm trying to obtain builder's costs, completion %age, %age remaining, and cost to complete based upon current status. From there I will determine market reaction to the valuation as if the renovation was complete, then subtract the remaining cost to complete the renovation, and then "somehow" determine market reaction to the partial renovation. This rationale is my own idea, although I almost certainly will need to base that factor upon interviews of local agents and appraisers. Question: Does my protocol make ANY sense???? [I hope to avoid comments pertaining to my prior experience.]

 

[ZZGAMAZZ]

If I have "more similar" properties then what utility does presenting less similar properties in the report add to my analysis?

There's a distinction to be made between actually analyzing the market from the outside-inwards vs the final comp selection we present in our reports. The macro analysis is supposed to occur prior to the final selection.

These other arbitrary machinations contribute to the fallacy that the appraisal hinges solely on the 3 or 5 sales presented as comparables in the report, and that all we have to do to get a different value conclusion is to swap out a couple of those comps in favor of other sales with different pricing.

The report conveys the manner and extent of the development; it doesn't drive the development.

These other arbitrary machinations contribute to the fallacy that the appraisal hinges solely on the 3 or 5 sales presented as comparables in the report, and that all we have to do to get a different value conclusion is to swap out a couple of those comps in favor of other sales with different pricing.

That comment answers a question I've been asking myself for a decade. Sometimes hard to see the forest for the trees.

 

[Overimprovement]

Have you ever appraised a really bad REO home where the value was basically lot value? I think my lowest appraisal ever was $5,000 lot value for a gutted, boarded up, torn up home.

I've come in at zero (and in the comments it was less than zero). C4 homes in area selling for $30K, subject was deep C6, needing $50K (everything really) just to get to C4, so razing was the only possibility, but that cost $8K and the lot was only valued at $3K, not to mention $3500 owed in property taxes.

Bracket that...

 

[Terrel L. Shields]

The report now is misleading if all the comps are superior ... Each one needs the most similar sales found as the comps

That is not true. If unadjusted yes. But adjusted? I mean if you have a house that is the BEST in an entire town full of sales, how do you bracket it? And if you have the WORST house in town, how do you find comps even worse? Even if going to other towns, is that comparable? I remember an appraiser commenting on valuing a lot with a dilapidated 19th century house in Telluride for $600k back in the 90s. The buyers rebuilt the house to the historical district specs. But would you go to say a non-tourist ski resort town for comps? Like even Montrose or Cortez (both 100 miles away or so) Of course not. If appraising the most expensive home in Telluride where do you go for a "superior" comp? Aspen? Vail?

You have to adjust and use judgment since a tight quant assessment won't work. Nothing misleading about that.

The reason for bracketing is it is a very good and reliable way to find the value, what the market is paying for same/most similar, and then inferior and superior.

again ONLY WHEN THEY EXIST

not sure if I am expressing myself well,

I'm not sure either but I think I like what you are saying.

 

[George Hatch]

These other arbitrary machinations contribute to the fallacy that the appraisal hinges solely on the 3 or 5 sales presented as comparables in the report, and that all we have to do to get a different value conclusion is to swap out a couple of those comps in favor of other sales with different pricing.

That comment answers a question I've been asking myself for a decade. Sometimes hard to see the forest for the trees.

IMO the REASON our readers come to think that they can change the outcome by swapping a couple comps is because most appraisal reports don't put a number of the listings the appraiser analyzed during the course of the assignment.

#A - appraiser runs a single MLS query and arbitrarily picks the 3 highest prices ​

#B - appraiser runs a single MLS query and analyzes all 40 listings before narrowing down to the 3 "most similar". ​

In a report the two processes will look exactly the same to a reader unless Appraiser #B makes the effort to summarize what they actually did to get to those 3 final comparables. If we don't TELL the reader that we also analyzed sales that bracket the subject attributes and that said analyses also contributed to our conclusions then they have no way of knowing what we actually did.