What's with the "appraised value over predominante value for the neighborhood" stip?

[Metamorphic]

Is that just the weakest cheese reviewer comment ever?

Half of the properties in the neighbored are above the predominant value. And for that matter 1/2 of the properties are below the predominant value. If anything a reviewer should be concerned if the appraised value were exactly the predominante value because that's so dang unlikely. For that matter, there's no established protocol that I'm aware of for determining the predominant value so its pretty much garbage as a reference point unless you know how it was calculated. In fact, that would be a much better reviewer comment. "How was the predominate value calculated?" I'm pretty sure 9 out of 10 appraisers just pull that out of their rears so really the comment boils down to...."Your appraised value is higher than what you think typical properties in the neighborhood are worth. Does this mean that you think the subject is worth more than what you think typical properties in the neighborhood are worth? Ahhhhh yeah.

Also, how come they always ask about over predominante value....never under predominant value. Just the question itself screams out "bias" on the part of the reviewer and lender.

For that matter, if the reviewer is not looking at the report closely enough to have an opinion about whether a OMV over the predominant value (whatever that is) is reasonable or not, then what good are they? m2:

 

[panappr]

These are the nuts and bolts that some reviewers were mentored with along the way, but I haven't heard that one in a long while...

 

[JasonHaskell]

some lenders seem to key on it more than others. I have one that says if the appraised value is even a single dollar over the predominate then you must comment. I have a very snarky comment that I put in for those cases, that talks about how absurd it is to consider every property that is higher than the predominant to be overimproved.

 

[Metamorphic]

some lenders seem to key on it more than others. I have one that says if the appraised value is even a single dollar over the predominate then you must comment. I have a very snarky comment that I put in for those cases, that talks about how absurd it is to consider every property that is higher than the predominant to be overimproved.

You would not have to be much of a litigator at all to establish that policy as an attempt to exert price pressure.

I tell you, this particular client is digging their grave with me. Every time they come back with this nonsense my price for the next one goes up $25.

 

[Dan Umstead]

I have a canned comment in my appraisals that covers this. It was a popular stip 15 years ago and it has come back as of 2 or 3 years ago. It is buttcuss, but put in a canned comment and never hear about it again.

 

[TC]

I have a canned comment in my appraisals that covers this. It was a popular stip 15 years ago and it has come back as of 2 or 3 years ago. It is buttcuss, but put in a canned comment and never hear about it again.

I agree, it's making a comeback. Right next to, Are you geographically qualified to do this appraisal?

 

[Nancy Heiss]

Even the generic canned comments are questioned although it clearly explains the meaning of predominate. They want specifics, is the subject an over improvement?

 

[ctapraser]

Is that just the weakest cheese reviewer comment ever?

Half of the properties in the neighbored are above the predominant value. And for that matter 1/2 of the properties are below the predominant value. If anything a reviewer should be concerned if the appraised value were exactly the predominante value because that's so dang unlikely. For that matter, there's no established protocol that I'm aware of for determining the predominant value so its pretty much garbage as a reference point unless you know how it was calculated. In fact, that would be a much better reviewer comment. "How was the predominate value calculated?" I'm pretty sure 9 out of 10 appraisers just pull that out of their rears so really the comment boils down to...."Your appraised value is higher than what you think typical properties in the neighborhood are worth. Does this mean that you think the subject is worth more than what you think typical properties in the neighborhood are worth? Ahhhhh yeah.

Also, how come they always ask about over predominante value....never under predominant value. Just the question itself screams out "bias" on the part of the reviewer and lender.

For that matter, if the reviewer is not looking at the report closely enough to have an opinion about whether a OMV over the predominant value (whatever that is) is reasonable or not, then what good are they? m2:

They just want to make sure the subject is not an over improvement.

 

[Tom Woolford]

I have a canned comment in my appraisals that covers this. It was a popular stip 15 years ago and it has come back as of 2 or 3 years ago. It is buttcuss, but put in a canned comment and never hear about it again.

Me too. I throw in a comment about median values and standard deviations, and and how the subject falls within the standard distribution of values for the market and they seem happy. Of course its all BS because they have no idea what they are talking about anyway.

 

[G-man]

Yes, it is a odd comment.

I have a few standard comments regarding "predominate" values, whether it is a well kept home in an area that has a heavy influence of REO sales, a newer home in an older, established neighborhood, those homes in rural areas and for homes that due, in fact, conform within the market area. I typically determine what the predominate value is by using the MLS mapping feature, and draw the boundaries around my neighborhood. I see what has sold in the past 2 - 4 years, take the median or average price and use that as the predominate value. I may tweak it a bit to take into account my own knowledge of the market area, but I find that this works fairly well. It also helps to show the low and high end of the price range for the neighborhood as well.
Of course, when I did state that a home I was appraising in a small rural village was an over-improvement and did not conform, the client came back and wanted me to change it to "conforming". Their statement was, "well, it looks like an old home and has the same function as any other home, therefore it conforms to the neighborhood". Yeah, right. The home was over 5,500 sq.ft. on a 1.75 acre parcel, in town, with a 30' x 60' outbuilding and 2 car garage. If it conformed to the neighborhood, I wouldn't have had to go over 20 miles away to a different village in order to fine a comp. Morons.