Using a comp after the effective date

[Craig Roberts]

From what I understand you can use a comparable sale that closed after the effective date of the appraisal. Of course most lenders will want to see at least three sales that closed on or prior to the effective date.

Is this correct.?

 

[CANative]

I would say it depends on the underwriter and what their company policies are and how they interpret those policies.

I just completed a report. It's a subdivision with an extreme oversupply of new houses. I only want to use the MOST CURRENT sales and grid any active listings and contract sales. Two of my comps closed the day after the effective date and I used them. I kind of waffled about "changing" my effective date to keep the UW's off my back, but then thought better of it.

 

[Lobo Fan]

What if you moved back your effective date and the subject burned down?

 

[Craig Roberts]

Greg, it's a local bank and they're doing what they call an in house loan. The only person who will underwrite the report is the branch manager and they understand because it's a rural market and there are few sales in the area.

I was more or less concerned about USPAP, but from what I understand an appraiser can do a sales comparison analysis and only use one sale and still be USPAP compliant??

 

[J Grant]

i believe you can keep the inspection date the same, and change the signature date, if you want to add a comp.

 

[hastalavista]

I would say it depends on the underwriter and what their company policies are and how they interpret those policies.

I agree.

I just completed a report. It's a subdivision with an extreme oversupply of new houses. I only want to use the MOST CURRENT sales and grid any active listings and contract sales. Two of my comps closed the day after the effective date and I used them.

Per USPAP, I see no issue here:

In developing a real property appraisal, an appraiser must collect, verify, and analyze all information necessary for credible assignment results.
(a)
When a sales comparison approach is necessary for credible assignment results, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion.

(Bold is from USPAP)

If I'm a potential buyer and I've found out that some sales are going to close the next day for a certain price, I would use that information in my offer; why shouldn't the appraiser do the same?

For me personally, I would want to be able to put into the report that I had verified the data of these sales with some reliable source, and then confirmed that the sales did close; the information about these sales was known to me on or before the effective date, and I was able to verify their closing after the effective date but before the report was submitted. I may add in the report that had these sales not closed the next day (let's say they closed 5-days after), I would still give this data significant weight in my value reconciliation (which, I would).

 

[Otis Key]

Craig, there's nothing in USPAP about the date of sale for a comp. However, it is worded as such that you should disclose what you did and why you did it. So I would indicate that it was deemed the "best" of sales since it was on the market at the same time as the subject (if this is a sale that you're appraising) and therefore, in your opinion, was considered in a similar manner as the subject (competition) and that, even though it closed after the subject, is one of the best representatives of the subject's market value.

As we've all said time and again, EXPLAIN - EXPLAIN - EXPLAIN

I'd be happy to have that. In fact, I just did a retrospective appraisal and one of the best sales closed 3 days after the effective date of the appraisal. I explained it and sent it off to the client.

 

[Craig Roberts]

Thanks Otis

Your advice is appreciated. I talked to my supervisor and he said basically the same thing you said, I just wanted to get some feedback from you folks as well. It never hurts to get expert advice from more than one person.

 

[hastalavista]

Thanks Otis

Your advice is appreciated. I talked to my supervisory and he said basically the same thing you said...

Otis-
They say everyone has a twin; did Craig find yours?
(I thought you told me that after you, they broke the mold? )

 

[John Hassler]

Unless there has been some major market changing event between the effective date and the comp COE date, I would be very inclined to use such sales. It would be prudent to emphasize in your comments that although it was pending as of the effective date, the actual contract date was prior (assuming you have access to the info) which is when there was a "meeting of the minds". Having brokered many deals, there is rarely any renegotiation going on after loan approval. As a practical matter, "the deal" is over weeks before COE.