Verifying Sales

[DMZwerg]

Information for most, if not all, of the 4 items you cite can usually be found on the MLS listing sheet.

Not necessarily.
Here only "half" are (aka, not conditions of sale, not motivations of buyer, sometimes seller motivations (if REO), etc)

I don't understand why you place 100% trust in your conversation with the same agent who placed the written "ad".

The LISTING agent writes the listing, and the SELLING agent is often a different person. MLS listings are not everything about the property & transaction any more than an summary report is the entirety of an appraisal.

As for putting 100% trust in anyone, who says we do, and who says you need 100% trust to verify things? In my experience 80% of agents (if not more) will say the subject was in "good" condition, and of the other 20% over half use the word "excellent" in regards to condition. With the "goods" about half to a third will be willing to give details and these are often contrary (to my mind) with "good" condition. But what you often gain is insight into buyer & seller motivations, when seller paids occurred, and likely other info that is not on the MLS sheet including where the agent got the information (from assessor, seller, etc). Speaking of MLS I sometimes get good information of the Real Estate Condition Report, sometimes from the pictures, but in the case of REOs the RECR is blank or missing, there is ONE picture, and the only sources for condition information are the agents that have been through the property.

Back to that last statement ... the AGENTS that have been through the property includes more than the buyer's agent & seller's agent, but other agents who had buyer's that did NOT buy that property (and why) are (as I stated before) often the most reliable source.

I applaud you for calling every agent. At the end of the day, if you and I appraised the same cookie cutter home, I bet our appraised values would be within a small percentage of one another.

Irrelevant ... if doing a 1004 for a GSE I would have followed the scope of work and you would have failed to do so. Period.

If for another purpose the details on verification sources is not as strictly defined.

 

[Michigander]

I like to confirm condition of a sale through the buyers agent whenever possible, as well as why the buyer chose that particular house over others. Sometimes I find out tidbits about other potential comps based on these conversations. I also try to go to open houses to see future comps myself. We don't have scratch and sniff in the MLS, and importantly, the MLS is a tool for the agents to sell property. Not all is as appears.

For instance I just saw a house that looks quite nice in the listing, but it smells like cigarette, has poorly laid laminate floors, a rise between hall and bathroom flooring that is noticble, and the kitchen cabinet drawers seem to be off their gliders and very cheaply made. None of this shows in the listing and the listing waxes poetic about how well the house is maintained. The floor plan is awkward and there is some funkiness about it and the listing has about 600 sqft extra in size in the GLA by counting the garage.

Some of this information I would be able to pick up from the buyers agent, some from assessor, and likely nothing from the listing agent.

 

[Tim Hicks (Texas)]

If you want to test things, go look at a Fannie Mae REO listing. Fannie Mae wants top dollar for their REO properties and the agents take very strategic photos to make their properties look better...way better than actual condition and quality.

 

[Peter LeQuire]

If I cite MLS as my data source, having verified MLS data with someone with knowledge of the transaction, and recite "public records" or "Deed Book 1234, Page 5678" as my verification source, am I in compliance with the SOW for a GSE-related appraisal?

 

[Mike Garrett RAA]

I believe you have complied. Please note there is no where in USPAP that requires a phone call...only verification of the information. It's a grey area!

If the listing agent enters (inputs) the sales data into MLS does that constitute obtaining the information from a party to the transaction?

Does obtaining sales information from public record constitute verification of the sales price, terms, etc.?

Does viewing pictures of the interior of the listing constitute determining the condition?

I think it does but that is only my opinion. I have personally found viewing the photos to be better than asking an agent to describe the condition. All too often the agent will say..."It was a 10!"...when in reality it was a 7. Or how about the infamous "Immaculate!"...when it was really a POS (you fill in that word).

Case in point the house next door to me. The listing called it "cute and nice". This house was trashed by 3 dogs and 2 cats. It literally smelled so bad I couldn't even go in there. When looking at the photos it was easy to see the stained carpeting, etc.

I'm not going to tell anyone they don't have to make calls to agents, sellers, or buyers. It should be your decision. I will tell everyone it's your report and you are responsible for the quantity and quality of your data. How you obtain that data is up to you.

I still believe in verification of the sales data from 2 sources and I consider those sources to be properly documented MLS sold report AND public record.

 

[residentialguy]

I believe you have complied. Please note there is no where in USPAP that requires a phone call...only verification of the information. It's a grey area!

But not according to FNMA.

If the listing agent enters (inputs) the sales data into MLS does that constitute obtaining the information from a party to the transaction?

No, that is data that needs to be verified. Have you never seen a mistake? I just called on a sale for 185,000 and the concessions were listed at $181,000. I called and verified that it was incorrect..it was FHA with 3% paid and the seller would have sold the home for 3% less in lieu of paying 3% concessions.

Does obtaining sales information from public record constitute verification of the sales price, terms, etc.?
Does viewing pictures of the interior of the listing constitute determining the condition?

No, again, that is data that some put in. Per FNMA, Examples of Data sources include: a multiple listing service, deed records, tax records, realtors, builders, appraisers, appraiser’s files, and the Internet.

I think it does but that is only my opinion. I have personally found viewing the photos to be better than asking an agent to describe the condition. All too often the agent will say..."It was a 10!"...when in reality it was a 7. Or how about the infamous "Immaculate!"...when it was really a POS (you fill in that word).

Case in point the house next door to me. The listing called it "cute and nice". This house was trashed by 3 dogs and 2 cats. It literally smelled so bad I couldn't even go in there. When looking at the photos it was easy to see the stained carpeting, etc.

Call the selling agent.

I'm not going to tell anyone they don't have to make calls to agents, sellers, or buyers. It should be your decision. I will tell everyone it's your report and you are responsible for the quantity and quality of your data. How you obtain that data is up to you.

I still believe in verification of the sales data from 2 sources and I consider those sources to be properly documented MLS sold report AND public record.

Unfortunately, FNMA IS TELLING EVERYBODY THESE TYPES OF ACTIONS LISTED BELOW ARE WHAT QUALIFIES AS VERIFICATION SOURCES

Examples of Verification sources include:
the buyer, seller, listing agent, selling agent (and closing documents in certain situations).

You don't have to call them...you could email them, fax them, take them out to dinner

 

[Michigan CG]

If you want to test things, go look at a Fannie Mae REO listing. Fannie Mae wants top dollar for their REO properties and the agents take very strategic photos to make their properties look better...way better than actual condition and quality.

Perfect example.

 

[hastalavista]

If you want to test things, go look at a Fannie Mae REO listing. Fannie Mae wants top dollar for their REO properties and the agents take very strategic photos to make their properties look better...way better than actual condition and quality.

Wait a second... I thought the argument was that if a property was an REO, the owner is motivated to get rid of it quick... not get as much as it can (like any other seller)! :laugh:

(I'm just kidding... kinda... I don't want to sidetrack the main topic)

 

[ucbruin]

Excuse me?
Just as I gave an example does NOT mean I can not comprehend other points of view, something you should have noticed given I also stated I used to work with an appraiser that did 10-15 per week average (cookie-cutters, stacking inspections, etc, all before the bust).

Here is one thing you have not mentioned in your scenario ... expenses. Given $0.55/mile if you have 2x-3x the number of inspections you may well have up to double the mileage per week. If two appraisers make the same $/week the one with lower expenses should have a higher net.

Just saying.

Okay, your observation about expense vs higher net makes sense to me. But I can't remember what this response has to do with anything I may have posted. I'm sorry but I'm at a loss here (and I'm sure you think on my other post too.

 

[ucbruin]

Hey, if you want to go photograph every sale in MLS for every assignment go for it, personally I think expenses can be better kept lower in other ways.
We agree. So I don't do it.



If you don't understand statistics and probability then I likely can not explain the logic to you. As for what can or can not be trusted, you can trust X so far, but VERIFICATION is another thing, and VERIFICATION is also required.
Best quote I can think of is from "The Golden Voyage of Sinbad" where a character said "Trust in Allah ... but tie up your camel!"

Let us suppose that GLA listed in MLS is either pulled directly from assessor records or some other source. Now let us suppose every GLA in MLS is off by up to 25% and either high or low (possibly random for each case). To estimate GLA prior to exterior inspection would likely require in depth analysis typing in room sizes and estimating hallways, bathroom, closet & other areas not in MLS. You could type in this data for every property in MLS or you could utilize probability to narrow things down a bit. Since the difference is up to 25% if you select properties within 30% of subject size you have a group of potential comps to consider. Now then, there are 3 methods to try to verify the size ... driving the comp and looking at the exterior (my mentor can usually estimate quite well from exterior), using statistical analysis (mentioned above), or calling the agent. If driving a comp takes < 5 minutes per, data analysis 10 min per, and calling an agent up to 15 min per then obviously the fastest method is exterior inspection (which often also yields other potentially comparable or divergent items) and you can check 3 properties that way compared to calling agents (who also could be wrong).

But hey, if you want to waste your time go for it!



This response makes my head spin. You're GLA example: Assume all GLA data, regardless of where it comes from is 25% off.

1. Then I guess the only way we appraisers will know the correct GLA of our comps is to go measure every house we want to employ in our reports. How else will the appraiser know the correct GLA to use?

2. (my mentor can usually estimate quite well from exterior) WTF, now I know you are pulling my leg. This statement alone makes me question the validity of any comments you have provided. Really, your mentor had such acute visual powers as to determine the true GLA of a comp by just looking at the house from the street. And you want me to believe that your "mentor" was doing his due diligence? From your comment about your mentor, I have to believe that you admired him and probably now appraise as you were taught by him. Again, WTF!!!!!

3. Verify GLA with agent. You do realize that its the agents that provide the information found on the listing sheet so why would I call the same person who put in the incorrect GLA as my source of verification?


... and thus ALWAYS have to take TWO trips, one for subject & one for comps. So even if you have to inspect 3x as many properties in the field you often still gain time.

I can't hear you after your mentor comment!!!!!



I sense a reason break in there (aka, each sentence does not logically follow the one before it ... much like the "proof" that Alexander the Great has an infinite number of arms). You seem to be indicating an assumption that verification is used to massage non-comparable properties into "comps". No, you analyze the data, discover inconsistencies, and as ling as you are verifying sales anyhow try to discover why the apparent inconsistencies when making the verification calls. I mean, why verifiy terms of sale on a 300sf house on a city lot when your subject is a 3000sf house on 5 acres? Or why verify an REO/foreclosure that sold for less than half the price of non-reos if non-reos exist? (unless said has additional factors of importance, such as exact model match located next door when nothing else is either)



No credibility

Sometimes that can be so (especially if there is NO data on which to base a search, such as a new built with nothing in assessment card and prior sale was for vacant land) but you either learn how to punt or get clipped way too often.



So, why is doing verification calls too early in the process likely a bad idea?
Because then you are making way more calls than necessary, taking up more time than necessary, and doing so with less data on what you need to verify than if you waited until the proper time to make the calls.



If you do not know the appropriate time then either you need to figure it out (aka, "learn") or look forward to your first encounter with the state board.

Even though you no longer have any credibility with me I will answer this portion of your post. 1. Because you place so much emphasis on contacting agents and because you scorn me for not placing much emphasis on it-I'm surprised that you would whittle down the number of potential comps without first verifying that the data on the MLS listing sheet is correct and that you did get buyer/seller motivation. What you do, and so do I, is run MLS, go through the sales and whittle down the list based upon information that you did not "verify". So my thought is that you maybe discarding several sales that you may have found to be better comps then the ones you kept without knowing it-because you didn't verify with the agents prior to deciding to discard them. I don't know why this seems so foreign to your stance on the extreme importance to calling agents as your only source of verification. I don't post to be mean spirited and I don't post to justify my appraisal process or to change someone else's process. But when I read stuff like you just posted I can't help but respond.

Finally, from this point on please do no condemn other appraisers who do not follow your appraisal process. You can comment on it but you can never ever judge or condemn another appraiser after posting comment about your mentor.