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What would you do?

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Zavia

Thread Starter
Sophomore Member
Joined
Jun 30, 2004
Professional Status
Certified Residential Appraiser
State
New York
An appraisal done three months ago came back from the lender requesting a couple of minor things (which are not germaine to the issue at hand). At the time the appraisal was done, there were not any available sales or listings in the subject's PUD, which is newer construction.

I decided to take a look to see if anything has sold or listed in the subdivision since then, and there are a couple of actives which appear to be similar to the subject and are priced WAY UNDER what the subject appraised for, and the listing I used has been reduced as well. I feel this situation is important to mention to the client, with the possible retraction of the original appraisal, if such a thing is even possible.

What would you do?
 

hobbitt

Sophomore Member
Joined
Jul 30, 2008
Professional Status
Certified Residential Appraiser
State
Florida
Did you report a decling market on the OA?, as long as you noted everything properly in your report the effective date of the appraisal is just that. You can not control the clients work progress. There is no need to recind your report, if you found you made an error then by al means correct it. I would notify the client of the current market and recommend a current appraisal.
 

Zavia

Thread Starter
Sophomore Member
Joined
Jun 30, 2004
Professional Status
Certified Residential Appraiser
State
New York
The report does indicate declining market, but we're talking a MAJOR value reduction by what these listings are indicating. MAJOR.
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
The report does indicate declining market, but we're talking a MAJOR value reduction by what these listings are indicating. MAJOR.

An appraisal done three months ago came back from the lender requesting a couple of minor things ...

You do recognize what has transpired in the last 3 months? We are talking of the failure of Fannie, Freddie, Wall Street, major banks, total lending freeze, major increases in unemployment, falling consumer sales, etc.

You better believe prices have plunged across the US.

WASHINGTON (MarketWatch)-- Home prices in 20 major U.S. cities dropped 2.2% in October from the prior month, and had fallen a record 18% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with last month and a year ago, and 14 of the 20 metro areas showed record rates of annual declines. For the original 10-city index, prices fell a record 19.1% in the previous 12 months.

I would not retract the original appraisal as it should have reflected market conditions at that time as well as values. You are not a soothsayer or a professional foreteller of future events.
 

hobbitt

Sophomore Member
Joined
Jul 30, 2008
Professional Status
Certified Residential Appraiser
State
Florida
Thats true in many markets but its out of your control you do not tell the story you only report on it, Here in Florida many market areas are having the same problem with many being reset by the REO market, many of these REOs flood the market & rapidly reset the market. One other area to look at may be to if you have time is the contrived REO/shortsale market I have found several markets that the realtors are not even listing the homes or listing the day it go,s into contract to the realtors client, they use a lowballed BPO and are detroying markets. Then I add an addendum to my report and list all the players and let the lender know. (not that it does any good but It covers your bases.) and explanes the rapid decline.
 

Jerry Bone Jr

Senior Member
Joined
Feb 23, 2004
Professional Status
Licensed Appraiser
State
Oregon
An appraisal done three months ago came back from the lender requesting a couple of minor things ...
with the possible retraction of the original appraisal ...
Did the lender ask you for a current value?
Retraction of the original appraisal? No can do.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Tell the truth, full disclosure.
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
I would notify the client of the current market and recommend a current appraisal.

I would CALL the client and inform him of the current listings and also recommend a new appraisal. Acknowledge that the original report does not reflect current value.
 

Smokey Bear

Elite Member
Joined
Dec 8, 2004
Professional Status
Certified Residential Appraiser
State
California
Your report is as of the inspection date. You can let them know the values have dropped (yes, that's a new appraisal) but are opening up a can of worms.
 

stefan olafson

Senior Member
Joined
Apr 2, 2003
Professional Status
Certified General Appraiser
State
North Dakota
If you find it necessary send the client a letter addressing the new information. But the appraisal was completed as of a specific date and can't and shouldn't be changed. If the changes are that drastic a new appraisal may be warrented.
 
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