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When are appraisers going to "get it"?

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leelansford

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Illinois
When are appraisers (well, "many" appraisers") going to understand the manner in which "concessions to the buyer", from any source, are to be understood and analyzed by the appraiser?

For those appraisers who regularly communicate appraisals using the current Fannie forms, take a look at the definition of MV and the instructions regarding the appraiser's treatment of "concessions".

What totally amazes me--quite frequently in this forum--are the number of appraisers who appear to fail to grasp the concept that what may be "common" today regarding concessions to buyers (from any source) does NOT rise to the level of "normally paid by sellers as a result of tradition or law in a market area".

That is, these concessions would have had to been present ("NORMALLY paid by sellers as a result of tradition or law") when the market was characterized as a SELLER'S MARKET as well as today when the market is, in many areas, best characterized as a BUYER'S MARKET.

What gives? What's the problem with what I see as so many appraisers utterly failing to grasp this concept?
 
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Webbed Feet

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Feb 11, 2005
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Certified Residential Appraiser
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Canada
Mr. Lansford,

Gosh, your questions are easy. Intentionally crappy training AND the appraisers don't WANT to get it!

It's very simple really. If one comes up with stupid excuses to rationalize not making negative adjustments, it becomes just another of the many ways to hit the numbers the clients want one to hit... Besides! Who has the time to actually do the research? You don't really believe we have time for that when all the AMCs and everyone wants 24 hour turns do you! Silly, silly man! Gosh, hit the needed numbers, save time.. it's a win win!

;)

I'm rather surprised you're bothering to poise the question you did.

Webbed.
 
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Ross (CO)

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Jan 17, 2002
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Colorado
Isn't it .....concessions requested by the buyer and/or concessions offered by the seller ? They don't just happen without any impetus.

I'm surprised he wants to stir that muddy water too. Everyone is entitled to their own opinion on "grasping" the concept ! Face it, we're all going to handle the presence and influence of concessions.....by employing that element of best-judgment that Fannie allows one to use. The imfamous second * paragraph has a uniquely contradictory final sentence. Despite all of the massaging and consulting and tweaking that occurred as these new forms were crafted the Creators failed to offer specific instructions as to how ANYone ought to explicitly handle the concession issue. They could have at least offered a succinct definition of what they are, how to recognize them, and what one perhaps should do with them ! If we should do NOTHING with them....then tell us it's o.k. to completely disregard them. I truly believe that this concessions issue makes for an excellent new Advisory Opinion topic for the 2010 edition. Are we all patient enough to wait that long ?

Until then....I guess one handles them according to one's "best judgment"....and the particulars of verifying each, and any, transaction that could become the selected comparables for one's report. That stuff about...."as result of tradition or law"...sure does need a makeover. We have iPods now, and Blackberry's, and digital cameras. Tradition changes too as we see months become years become decades. I would love an example of how they might be "law".

I have no problem with how others want to handle the concessions that occur in their market. Total posted and recorded "price" - any unique or specific transaction "price" = resulting focused price for the house and land. We're not appraising the super-secret negotiation handshake. We're not appraising the funny-numbers. We're to appraise the house and land as a physical entity. I have never observed and reconciled a local market's sales whereby EVERY concluded sale had the SAME amount of "tradition" tacked on. The only way that patently inflated posted selling "prices" are going to be seen clearly is by wafting away the fog. Concessions are type of fog. Our job is to cut through the fog when such is necessary.
 

leelansford

Thread Starter
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Mar 29, 2002
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Certified Residential Appraiser
State
Illinois
...
I'm rather surprised you're bothering to poise the question you did.
Webbed.

Webbed (instead of the more proper Mr. or Ms. Feet...sorry, had to do it),

I suppose that I must be an optimist by nature.

Lee
 

leelansford

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Mar 29, 2002
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Certified Residential Appraiser
State
Illinois
...Everyone is entitled to their own opinion on "grasping" the concept !...


If only I saw wide-spread evidence (and I don't) that the vast majority of appraisers actually did grasp the concept.
 

Tim Hicks (Texas)

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Jan 15, 2002
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Certified Residential Appraiser
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Texas
I think appraisers are afraid to adjust for concessions because they don't want to make their clients unhappy. Fortunately, I always have some sales without concessions that almost always support my adjustments at dollar for dollar. Unfortunately, I am seeing higher and higher seller paid concessions when you would think it would be harder to get it done in today's mortgage market. $14,000 for a $120,000 property listed for $106,000 is ridiculous. Especially when the market only supports the $106,000. How did they get it closed???
 

Mr Rex

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Jan 12, 2004
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North Carolina
Dumbasses, see the other thread.:angry:
 

Tim Hicks (Texas)

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Jan 15, 2002
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Certified Residential Appraiser
State
Texas
Today's assignment: Three sales within six months with $0 paid seller concessions, three sales with $3-6,000 in seller paid concessions. All six adjusted dollar for dollar have a $4,000 spread ($129,000 to $133,000) on a $130,000 sale. Yet, if you don't adjust for concessions the spread is $129,000 to $139,000. Not a big difference, but if it was a refi, you could put the proper $130,000 with concessions adjustments or you could put $135,000 to $139,000 without adjustments. Only an appraiser trying to make their client happy with a refi would do it without adjustments.

Borrowers will always tell you how much a neighbors home sold for, but they don't like to hear how the neighbor paid $10-15,000 in seller concessions to get that price. They go deaf when that end of the discussion comes up.
 

Ross (CO)

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Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
....and, don't you feel-the-pain for all those situations where AVM's and BPO's and sundry other alternative valuation products were used instead of a conscientious appraiser.....and through the years those little 1% and 3% and 5% amounts of puffery were working to impart that subtle inflationary upward movement ? Things looking a bit flat ? Nothing that a little pumped air can't fix !

What a shame...to distort the entire price recording system so as to skew that very important factor of.....what houses are going for in the neighborhood !
 

leelansford

Thread Starter
Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Nothing masks declining prices better than seller concessions.
 
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