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

[Caterina Platt]

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.

OK, so is that the comment you put in your final copy of the report? Hell no it doesn't conform and how dare you coerce me to state it does!!

 

[Caterina Platt]

There are some clients that require it no matter if the appraised value is one dollar more, which means to me they have no clue about the definition of over improvement.
It gets better. I spoke to a reviewer about 3 to 4 months ago about another issue. We were chatting and he asked me why my predominate value never equaled the appraised value and since he does all the reviews in my area, could I make it easier on him to have my predominate value equal my appraised value like all the other appraisers in my area.
I fell out of my chair, and educated him on the fact.
This long story leads me to my point. Appraisers are now appraising to guidelines.

EXACTLY!! As have been underwriters for decades apparently. No one knows truly how to appraise or underwrite. Just check boxes for the Fannie form.

I had this very same conversation that just blew my mind about a year and a 1/2 ago with a Suntrust underwriter who'd been in the business for 20 years and headed up her department. I was floored. She couldn't tell you if the value were supported or if the appraiser had lied his/her backside off, but by God that predominant value statement was there and all 4 boundaries stated on page one were visible in the Location Map. When the Feds converged on one of the main offices back east and began combing through files, this same underwriter wanted to beef up her due diligence. Good call, right? How did she do it? She began using the Appraisal Port auto reviewer program which fires errors for all extraneous Fannie guidelines and some that don't exist. She didn't know where to begin truly digesting the reports in front of her. It was so sad. I spent hours on the phone late last winter and early spring with her trying to explain appraisal and valuation processes. Why what she and her department was demanding was pointless and/or flat out wrong in some cases (trying to force use of distress comparables when she deemed in necessary rather than the appraiser) Unfortunately, her longevity in the business gave her unwarranted stubborn confidence. She wasn't about to be taught anything new. She was clueless and bullheaded.

I came away from that experience with the strong feeling that not only should we develop requirements and training for underwriters, but also that I believe the industry is fooling themselves trying to centralize this function many states detached from the area they are lending. I honestly think underwriting should be local.

We often complain that the users of our reports can't tell you whether it's fact or crap. They can't recognize the good from the bad, and this is a big reason why the clueless form fillers that accept the lowest AMC fees are allowed to continue in this business. The clients can't recognize their incompetence!! The clients themselves are often clueless. It's a shame. This system is so broken.

 

[Metamorphic]

Just for the record.
Predominate means the Mode NOT the Mean nor the Median, therefore it is the number which appears most often in a dataset.

I'm well aware of the difference. But I've always assumed that if the person at FNMA that thought up that part of the form knew what they were doing they would want a mean or median, because use of the actually predominant could be incredibly misleading. A list of a sales from a neighborhood could easily be as short as a couple hundred entries. Even if you assume that all sales are rounded to the nearest thousand (not necessarily true) you would frequently find that the predominant value in the list could be defined by 2 or 3 sales.

I fact I bet if you did a regional study of home sales prices you'd find that at the upper end of the market you'd find buyers and sellers more often settling at more coarsely rounded prices (tens of thousands at least, often at the $25k, $50k, and $100k cardinals), which would lead to a greater likely hood of multiple sales in the neighborhood at same values and hence greater likely hood of high end properties defining the "predominant" value.

 

[Ken B]

Just for the record.
Predominate means the Mode NOT the Mean nor the Median, therefore it is the number which appears most often in a dataset.

Thank you.

 

[Buddy5]

Predominant

There is no E at the end.

Sheesh, I leave for a while and this place goes to hell.

Thank you!

And it's not predominate either.

It's predominANT.

If we're trying to talk intelligently about a topic let's at least use the right word.

 

[David Mescon]

Predominant

There is no E at the end.

Sheesh, I leave for a while and this place goes to hell.

Thanks TC! I was just reading through the thread. My first thought was the misuse of the word predominate. My second thought was... where's our resident English professor???