Using Subject Prior Sale as a Comp

[Mr Rex]

crazy. I am of the school that a closed sale of the subject at arm's length is the best comp there is. Unless the underwriter could provide me with something SPECIFIC that I agreed to saying I wouldn't use a subject sale as a comp, I would have to side with Duck Dodger.

Edited to add:

A fourth comp indicates quantity...not relative positioning of the comp. So, I would say that you can use the subject sale as comp #1, as long as there IS a comp #4... Like webbed says, where it falls in relative position means nothing. Some people set them by distance, some by price, some by overall similarity....there is no accepted method of "ordering" comps. Supply them with a 4th comp to comply with the regs if you didn't already, and tell them where to send your check.

So why any other comps at all? Somebody paid this much for the subject recently, namely the person now trying to refi. Their motives in relation to the overall market are isolated to the subject. Hardly an arms length analysis of the subject's value when so much emphasis is placed on the singular motivation of the person now tyring to refi, For that matter, if you were considering buying the subject, would you give a rats *** what the current owner paid? Or would you look for other sold comparables? Not since the garden of Eden have there been no other properties for comparison, at least 3 others anyway. If the subject is its best comp, prove it by showing me 3 shiddy ones that illustrate the subject's value, and feel free to grid the subject as number 4 for illustration.

 

[Abester]

Abester - I'd read up on Special Use properties and H&BU carefully

I'd love to, but the land is similarly inferior no other sales. Even if all the value is in the land, the last sale is still likely the most relevant information to a typical market participant...

 

[Joyce Potts]

No way. What if it's a 'flip"? That's like only using developer data, to some extent.

That said, the subject's sales history can provide useful information, but using the subject to comp itself out is pretty weak, IMO. Besides, of what use is a year old comp in most markets anyway?

 

[TJSum]

Maybe the subject owner paid too much for their recent purchase and skippy made it work when he should not have. I am with the group that says ok fine, use the subject as a fourth comp just to show it, but as one of the three main comps, no way.

 

[Joyce Potts]

Maybe the subject owner paid too much for their recent purchase and skippy made it work when he should not have. I am with the group that says ok fine, use the subject as a fourth comp just to show it, but as one of the three main comps, no way.

You just hit the nail on the head for not only our subject property, but for the other 'sales' where Skippy hit the contract price that resulted in higher prices being paid for nearby properties, perhaps?

It's a domino effect--and I have a perfect example of one, with subsequent neighboring purchases relied on that first sale, etc.-- I did as a forensic review for FNMA. The snowball got bigger and bigger and took out multiple people.

The higher appraisal is NOT always the 'good' appraisal. Too many short sighted number hitters that pleased their client, the borrower, etc., that failed to look at the long term ramifications and melt down.

 

[Webbed Feet]

To All,

That basically triggered a Collateral Review at the lender (Wachovia), which killed the deal.

I do not believe that the lack of including one more closed comp, one that would have had to have been utter junk to use, would have stopped the collateral review! Even if the subject prior sale was positioned as comp number four and stated to have been given no weight at all!

What is at issue here is the subject is the biggest damn condo unit in the project and is atypical. Correct Mr. Lentz? Or I am wrong about that? What may have gotten a very hard look at was the borrower as a credit risk due to owning an atypical property. And a condo one too boot. It is the upper end of things that are hard to sell in my area currently. Ten of the top appraisers on this forum could have collaborated on this assignment and it still may have gotten killed in a collateral review!

What is at issue here is not so much what side of the coin regarding use of prior subject sales as comps we are on. What is at issue is clients manufacturing opportunities to stiff appraisers for fees due to things that may have happened regardless of what was done, or not done, in the appraisal of the property. Besides, honestly, is there really one person participating in this thread that is going to tell me they believe the L.O. involved never looked at the appraisal before sending it off? In a pig's eye. Sorry, this just is not some egregious error causing a legitmate reason for the loan getting killed. It's an excuse.

Webbed.

 

[lostinthezone]

Based on the email trail I'd say you were being played. I'd repeat my demand for written documentation of the appraisal being rejected and a contact number for the underwriter to verify it. I'd add that if you don't get it you'll be forced to sue for non-payment of services. I'm also assuming that you don't intend to do business with this client again.

 

[Lawrence R.]

So why any other comps at all? Somebody paid this much for the subject recently, namely the person now trying to refi. Their motives in relation to the overall market are isolated to the subject. Hardly an arms length analysis of the subject's value when so much emphasis is placed on the singular motivation of the person now tyring to refi, For that matter, if you were considering buying the subject, would you give a rats *** what the current owner paid? Or would you look for other sold comparables? Not since the garden of Eden have there been no other properties for comparison, at least 3 others anyway. If the subject is its best comp, prove it by showing me 3 shiddy ones that illustrate the subject's value, and feel free to grid the subject as number 4 for illustration.

Let me answer your question in a professional manner:

Because, silly, one comp doesn't make a market. It is still the best comp available in that market. You and I can disagree all day, you won't change my mind, and I can't seem to locate yours. And yes, I would be ddeply interested in what the seller paid for the house. I agree with your premise about halfway down your post, which is obviously where you stopped reading mine....I too think he should have used 4 comps to comply, but I don't care what number you give to the sale, where you put it on the grid is meaningless.

 

[Don Clark]

XXXX,

1.) The subject is one of the best comps available - it is identical to itself - read the commentary.
2.) The deal was more likely killed because the LTV is high...and the market is declining.
3.) I will do what I can to help, but as agreed, the fee is not contingent on a loan closing. It's against the law to operate otherwise.

Sincerely,
Rob Lentz

Rob,

If this is a federally Regulated Bank, the OCC will make them pay. I have the information on where and who to send the complaint to at the OCC if you need it.

 

[Rob Lentz]

Moral of the story.He who collects COD, has full belly.

Rob,

If this is a federally Regulated Bank, the OCC will make them pay. I have the information on where and who to send the complaint to at the OCC if you need it.

Unfortunately, this was a MB and I put myself in this position by agreeing to invoice - I have his signature on my order form that acknowledges that the fee is not contingent on closing a loan. BUT - how much $, or time is getting a $300 fee worth? I understand its a principle thing, but I'm half tempted to write it off and move on and NEVER invoice again (except to my credit-worthy/proven clients, i.e. local FRB's). Typically I do not invoice new clients, and I'll bet that had I collected the fee up-front I would be getting an opportunity to explain more, add more data, etc. I probably have a snowball's chance in hell of getting anything out of this MB L/O that'll help me get to the qualified UW/Chief Appraiser, etc.

I think it is high-time for the OCC to also regulate MB's

Don, I would like that information posted for the benefit of all

Sincerely,
Rob Lentz