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Underwriters and their hang up with Predominant Value

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Caterina Platt

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
New Mexico
Do you ever find this fixation annoying and irrelavant?

Example 1) You explain in your sales comparison comments that the subject has a larger floorplan for it's development. You have a couple sales in your immediate development, one slightly smaller, one larger and an active that is similar size. You also offer another closed sale similar size from a nearby competing development, again explaining that it is the best additional data for a larger dwelling of this type/age, etc. in the subject's market area.

Underwriter response: you must make a comment why the subject's value is greater than 25% higher than the predominant value.

Example 2) Market area is a broad mixture of dwellings (discussed in the market comments) and the hi/low/predom range is $91K, 1 mill and predom at $282K. Your subject value is $193K and you have 4 closed sales and 1 pending comparable all selling within 90 days marketing time, within the immediate and surrounding subdivisions, and bracketing all features. Adjustment percentages are minimal, and all dwellings are similar age and very similar in value range.

Underwriter response: comment on subject's marketability as it is below the predominant value for the area.

Example 1) Duh! We told you it was larger for the location?!

Example 2) Ahem. Is not the 'marketability' of a dwelling like the subject illustrated for you in Sales 1-4 and the pending???!!! How's about the 9 actives and 17 closed similar dwellings noted on the top of page 2? They range from $145,000 to $207,000.

Sorry, this just gives the implication that all dwellings must be average, middle of the road or else something has got to be wrong. When you have ample sales data, minimal adjustments, comments where needed, minimal distance from the subject, etc., why this fixation with predominant pricing?
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
The estimated market value lies above/below the neighborhood predominant value as is often typical within neighborhoods were a mixture of home sizes, design styles, and value ranges are present. The subject estimated value falls within the acceptable range of values for the neighborhood and the marketability is not affected because of its above/below position in relation to the predominant neighborhood value as estimated by the appraiser. This is evidenced by the relative number of sales both above and below the predominant neighborhood values as indicated on page two of this report.

As further explaination, and in order to demonstrate this principal, it is very much like underwriters. Those with high intelligence (above the predominant intelligence range for the profession) typically do not require stipulations of appraisers on work that can be logically reasoned based upon the facts as presented within the appraisal. Those with lower intelligence (lower than the predominant intelligence range for the profession -- often referred to as "mental incurable obsolescence") typically are unable to understand reasoning and facts as presented to them and thus must issue stipulations in order to have the appraiser write endless paragraphs so as to further educate them on what they should understand from what they read in the first place.
As in housing, based upon the appraisers experience, both underwriters above and below the predominant intelligence level are in demand and thus are considered to be employable. The subject home, is much like you, below the neighborhood range but still marketable.

I trust this will satisfy your concerns and further help you to understand my writings. Should you have further questions please do not hesitate to contact me.
 
Last edited:

Eli Weiss

Senior Member
Joined
Nov 28, 2005
Professional Status
Certified Residential Appraiser
State
New York
I get this all the time, and I know why, because Skippy always matches the subject value to the predominant value....and most underwriters are skippy's.

Dear underwriter:
The predominant value represents the market as a whole and basically tells you the "mode" of the market values, the subject's value is based on a separate analysis and may or may not equal the predominant value and they should never be linked.......
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
I get this all the time, and I know why, because Skippy always matches the subject value to the predominant value....and most underwriters are skippy's.

Dear underwriter:
The predominant value represents the market as a whole and basically tells you the "mode" of the market values, the subject's value is based on a separate analysis and may or may not equal the predominant value and they should never be linked.......


With all due respect, I think my "example" was much more elightening. :peace:
 

Eli Weiss

Senior Member
Joined
Nov 28, 2005
Professional Status
Certified Residential Appraiser
State
New York
With all due respect, my overpriced Starbucks coffee is keeping me up....
Your response was not yet posted while I was creating mine.....

PE, your posts are "always enlightening", and I love reading them, especially late at night, keep it up.

My spellchecker gave a red on this word "elightening".....
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
With all due respect, my overpriced Starbucks coffee is keeping me up....
Your response was not yet posted while I was creating mine.....

PE, your posts are "always enlightening", and I love reading them, especially late at night, keep it up.

My spellchecker gave a red on this word "elightening".....


So become en-lightened will you ..... :rof:
 

Caterina Platt

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
New Mexico
Now gentleman, you both shed light on valid points.

In review work, I often notice how the predominant value is exactly or very near what the appraiser estimated as the value.

I'm half tempted to respond back with something along PE's response. Reading comprehension being what it apparently is, what could it hurt?

I want the neck of the yo yo who put these ideas into these young, impressionable underwriting minds.
 

Bearslide

Senior Member
Joined
Dec 9, 2004
Professional Status
Certified Residential Appraiser
State
Pennsylvania
The estimated market value lies above/below the neighborhood predominant value as is often typical within neighborhoods were a mixture of home sizes, design styles, and value ranges are present. The subject estimated value falls within the acceptable range of values for the neighborhood and the marketability is not affected because of its above/below position in relation to the predominant neighborhood value as estimated by the appraiser. This is evidenced by the relative number of sales both above and below the predominant neighborhood values as indicated on page two of this report.

As further explaination and in order to demonstrate this principal, it is very much like underwriters. Those with high intelligence (above the predominant intelligence range for the profession) typically do not have stipulations of appraisers that can be logically reasoned based upon the facts as presented within the appraisal. Those with lower intelligence (lower than the predominant intelligence range for the profession -- often referred to as "mental incurable obsolescence") typically are unable to understand reasoning and facts as presented to them and thus must issue stipulations in order to have the appraiser write endless paragraphs so as to further educate them on what they should understand from what they read in the first place.
As in housing, based upon the appraisers experience, both underwriters above and below the predominant intelligence level are in demand and thus are considered to be employable. The subject home, is much like you, below the neighborhood range but still marketable.

I trust this will satisfy your concerns and further help you to understand my writings. Should you have further questions please do not hesitate to contact me.

Priceless.........:rof::rof::rof::rof:I vote we all send our stip requests to PE for reply.............
 
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