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Using a comp that closed after date of value

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Tobias Olney

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Freshman Member
Joined
Jun 20, 2006
Professional Status
Certified Residential Appraiser
State
Hawaii
Hi all,

We recently completed a FNMA 1004_05 appraisal report showing a value X, effective date Y. Comp 4 was a listing that closed 3 days later. As a closed sale, it becomes the most similar, reliable comp, and would influence the value opinion to X +3%. The lender would like us to use this sale. We'd like to accommodate them in the most economical way possible.

Can we revise the appraisal and just weight the listing and put a side note that it since closed, and that's why we're weighting it? Or would this now move us solidly into an SMT-3 retrospective appraisal, which would require other changes that the lender wouldn't want "value *was* vs. *is*..."?

As far as I can see, we need a new assignment, at least drive by to reinspect, and change the date of value to after closing of comp 4. I only want to do (and charge for) that work if it's necessary, though.

Thanks!
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Using a comp that closed after the effective date of the appraisal is not proper because that information was not available to the market participants (buyers and sellers) on the effective date of the appraisal, so it could not possibly have any effect on the value of the subject property as of the effective date. If the client wants it included in your appraisal report, that technically is a new assignment (requiring a new inspection)since you need to reappraise the subject's value as of a different date (after the closig of the comp). Since that would be minimal work, I would do that for most of my clients without charge or with a minimal charge in order to keep them happy.
 

Tobias Olney

Thread Starter
Freshman Member
Joined
Jun 20, 2006
Professional Status
Certified Residential Appraiser
State
Hawaii
Thanks, Tim. That's pretty much how I see it.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
fact #1 - comp 4 was actively listed and apparently under contract as of the Effective Date of Appraisal.

questions - was it reported as Active .....or Under Contract ?

was the Contract confirmed and the Closing Date
obtained and reported in the appraisal?

was it given NO WEIGHT in the OV??????
IF SO - then why was it in the grid.

is the "lender" a Lender or a Mortgage Broker?

was the request to simply revise the report

and change the status of C4 from Act or UC to TT
without changing the EDA ?????

to honor the request:

NEW assignment, new scope, new effective date - new
exterior pics plus walk thru of subject.

what Fee you charge is a Business Decision.
 

Frederick

Senior Member
Joined
Nov 2, 2005
Professional Status
Certified General Appraiser
State
New Jersey
Revisit the subject and change the date of value.

That being said, I do my best to avoid allowing a single sale to significantly influence the Opinion Of Value.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I agree with Mike K's post as I understand it.

If you used this property as a non-closed comparable, I assume you gave it the appropriate consideration and analyzed/adjusted it as the market would have in your analysis grid. Therefore, at this point, any change would be revisionist history.
(BTW, if you were able to confirm the contract sale when you did your appraisal, then its closing price may have been given consideration in your value reconciliation, IMNSHO).

At this stage, if your client wants a new valuation, then follow Fredrick's advice.

Good luck!
 

Michigan CG

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Staff member
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Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
In the original post you say that you have a comp that closed three days later. Therefore you have a willing buyer and a willing seller and a sale. The detail is that it had not yet closed but the agreement between the two parties was made before the effective date of your appraisal.

I would call the Realtors involved (which should be done all reports anyway) and make sure it is a normal transaction with no funny stuff and I would consider that a sale and explain it in your supplemental addenda.
 

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
The easiest way to handle this is go out and walk through and around the dang subject property.

Issue a new appraisal report with the new effective date.

CHARGE THEM! How much, I dont know, how about an extra $100 bucks or $150 bucks.

STOP GIVING YOUR SERVICES AWAY!!!!! STOP IT!!

Where is Ray when you need him to give another Bus 101 lesson.
 

Tudor

Member
Joined
Aug 15, 2006
Professional Status
Certified Residential Appraiser
State
Arizona
"As far as I can see, we need a new assignment, at least drive by to reinspect, and change the date of value to after closing of comp 4. I only want to do (and charge for) that work if it's necessary, though"

my bold

That is not a good idea (for many many reasons), you need new photos of exterior AND interior. And charge for it.:)
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
It after the date of the original appraisal. No I would not.


Just how much is the +3%. When doing reviews I am happy if I am with in 3% of the original opinion of value. How about you or any one else? Matter of fact I would perfer to give a range of value of 2% to 5% for most subjects. Never was good enough to hit the nail on the head, (unless of course I had the contract price in front of me as a number to hit :rof: :rof: :new_2gunsfiring_v1: ).
 
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