What Do You Consider To Be Data Sources And Verification Sources?

[residentialguy]

My HUD post is a good rule of thumb

 

[Have Laser-Will Travel]

Amazes me how some take their responsibilities so cavalierly!

For those that think that public record is a reasonable verification source, I remember the sale of a gas station across the street from my office that was recorded at a particular price. In verifying the data, I called the current owner (the grantee) and found out that the sales price was the result of an agreement entered into nearly 25 years earlier. Yep, them public records are the be all and end all!

However, if MLS agrees with public record, you have MLS verifying public records.

 

[residentialguy]

However, if MLS agrees with public record, you have MLS verifying public records.

But it is still a data source and geared to sell the house, not for honestly and disclosure. FNMA is clear on that. Besides, MLS does not explain the conditions of the sale itself, which is one of the main reasons to verify....it only reflects a very strategic and tweeked views of the features (often hiding issues), and regurgitates data, ie closing date, price, etc. To find out the whys and whats that was the catalyst of that sale, you need to call & verify with the party of the transaction.

 

[Terrel L. Shields]

Catch 22. There are no uninterested third parties. Everyone who knows anything about the transaction has a dog in the fight and/ or is subject to GLB privacy act.

 

[residentialguy]

Catch 22. There are no uninterested third parties. Everyone who knows anything about the transaction has a dog in the fight and/ or is subject to GLB privacy act.

Not much of a dog after the deal has closed.

 

[Terrel L. Shields]

Not much of a dog after the deal has closed.

The renter told me a place he was losing the rent on sold for $1.1 million. I already knew it sold for $780,000.

 

[residentialguy]

There are no uninterested third parties.

You're taking this out of contest. That means, for example: if the agent of your subject gives you comps and tell you that such and such comp sold below MV because they were going through a divorce, you can't take their word for it because they have an interest in the outcome of your appraisal. You have to verify what they said to be true, therefore you call the agents of that comp, who are uninterested in your subject.

 

[Have Laser-Will Travel]

But it is still a data source and geared to sell the house, not for honestly and disclosure. FNMA is clear on that. Besides, MLS does not explain the conditions of the sale itself, which is one of the main reasons to verify....it only reflects a very strategic and tweeked views of the features (often hiding issues), and regurgitates data, ie closing date, price, etc. To find out the whys and whats that was the catalyst of that sale, you need to call & verify with the party of the transaction.

You're taking this out of contest. That means, for example: if the agent of your subject gives you comps and tell you that such and such comp sold below MV because they were going through a divorce, you can't take their word for it because they have an interest in the outcome of your appraisal. You have to verify what they said to be true, therefore you call the agents of that comp, who are uninterested in your subject.

I've heard that MLS plus public record is compliant as seen by some who have served on state boards and have been in the upper realms of regulation. What you are saying makes sense regarding your read of the requirement. It just seems incredible that anyone would think that we would know all the parties to the transaction and their contact info, that they will talk to us and that they will be okay with getting peppered by phone calls from appraisers all day and that they will be truthful, accurate and remember.

IMO, this is why there are three comps and not one. When I do I have a comp that is an outlier or won't reconcile, then I call.

 

[residentialguy]

t just seems incredible that anyone would think that we would know all the parties to the transaction and their contact info, that they will talk to us and that they will be okay with getting peppered by phone calls from appraisers all day and that they will be truthful, accurate and remember.

So, how do you know the motivations of the buyer and seller, if they are related, how much the property would sell for if the buyer didn't need the concessions to be paid by the seller, etc???? These can have a profound effect on the sale price. And fyi, state boards have slapped the appraiser with a violation for not verifying these things with the party of the transaction.

 

[Terrel L. Shields]

how do you know the motivations of the buyer and seller

Sometimes it is obvious. Sometimes the MLS states why the seller is motivated. Sometimes - such as estates - no step for a stepper, right? Also, we have several buyers and others in my area whom I know have been motivated. I did a private appraisal for a couple who have long been separated but are on friendly grounds, and their son handled the valuation. I gave him several options to a difficult property - too close to a smelly large enterprise, but otherwise might be attractive to the point of a premium to nearby owners...which is exactly what happened. A neighbor bought it. And he gave a premium price - about 20% over what I estimated it would bring on the open market. I had suggested he ask a price well over the MV and lower the price if either the plant or the neighbors didn't buy it. That's what he did and he called to thank me for the advice.

Asked one why he bought this 113 acres...he is my neighbor who makes a lot of money and he basically said because he can and he didn't want to see it cut up into housing. Rich people do things like that. He'll probably clear some of the overgrown parts, fence it and put Charolais cattle on it. But he paid far too much for a "legacy farm" that has been in the family for over 100 years simply to grow cows.

Another chicken grower I know bought some likewise overpriced land. I don't need to ask why. He's going to put $3 million dollars worth of barns on it. Does it matter if he paid $4000 an acre or $5000 an acre when that's not even 10% of the overall investment? I don't think so. My problem is to figure out if that is a "market price" or not.