Why can't the number hitters see the inevitable?

[The Bob]

If you're going to rant on number hitters, at least use an example we can all relate to. After reading your post and some of the comments, I was dumb struck.....You really beleive two appraisals on this kind of property are going to be close? Jesus Christ, you can't even find one comp with similar feature (hanger) yet you KNOW the value? I have no idea what a hanger adds to value, if it adds any at all, but how can you say it adds zzz. Just because two appraisers opinions differ doesn't mean the guy with highest value estimate is a fraud.

 

[Tim Hicks (Texas)]

Well, Jim Bob, if you read my posts, you should realize that utilizing comps that are 10-15 miles away and comps with 100,000+ higher land values (lake front) do not make an appraisal legitmate. Especially when there are plenty of home sales from the same gated addition that have every thing but the hangar, just like all of those comps the other appraiser used but are 800-1,200 SF bigger, but don't have a hangar either. Surely, you have reviewed enough appraisals in your day to spot the obvious. If a property is over-priced, just use superior homes with regard to living area or lot value and forget about the homes in the neighborhood. I see it more often than anything else in other reports. The other appraiser was appraising a number, he wasn't worried about anything else or he could have included any 20 sales of the same size/age, lot value and construction quality within a mile of the subject.
Plus, I know what the property cost to build and I know that the hangar did not cost $100,000 to build. I know what the home would sell for without the hangar. Also, I have appraised properties before with hangars and I am not incompetent with regard to contributory values for these type improvements or the ability to compare the differences in a hangar.
I have done additional research since that original post and I did uncover four sales with hangars within 80 miles of the subject property. I have one within 40 miles and none over $283,000 (the other appraisal was for $433,000 on a 2,800 SF home with 2,100 Sf hangar). I have one sale with a 4,900 SF hangar that sold for $250,000 and it is only 40 miles away and it is 400 SF bigger in living area and on three acres. I still believe these sales could only be utilized as support to the market estimate and the most reliable approach to value is sales within the addition and proper adjustment for the hangar.
You see, Jim Bob, if an appraiser can not faithfully perform an appraisal and give a value that he can stand behind, then he should be in this business. It is ludicrous to say that I can not address value on a property because I have no other sales with hangars. Or, to say that I have no better estimate than the original appraiser. You can punch holes in the other appraisal on each and every comp, the cost approach and his lack of addressing underwriter issues. The only thing in my report that can be questioned is did I undervalue or overvalue the hangar. There are no questions about distance, lot values, too large living area differences or location. The only way the other appraisal could be more legitmate is if he had one, just one sale with hangar.
As a professional, we appraisers are asked to appraise difficult properties. We are not always going to have earth home comps, log home comps, home sales with hangars, home sales with metal workshops,etc. However, we are paid to give our "professional" opinion. It is inherent that we don't practice to deceive the underwriters with muddled data. I am always open to consider any additional sales that might influence my value opinion, but they do need to me more similar than the sales I utilized. I never said that the original appraisal was fraud because it was higher, but who are we kidding here. You know and I know a "bogus' appraisal when we see one. If I can't spot a "number hitting" appraisal, then I should turn in my license right now.

One more thing, Jim Bob, I don't think you realize how bad the "number hitting" situation is in our profession. I never question an appraisal that has minor errors if the comps selection appears appropriate and they explain why they adjusted for certain things. I only get to see "other appraisals" 3-4 times a month and it is alarming what I see. Obviously, there are appraisers out there that don't ever fear getting caught or they don't fear the consequences if they do. Doing reviews and seeing other appraisers work makes me a better appraiser. I see the mistakes they make and I make sure I don't make the same mistakes. I also believe that some appraisals get unfairly reviewed (I have before), but the percentage the wrong way is quite small compared to the number of appraisals that go unchecked and slip by. Plus, most reviews give the appraiser a chance for rebuttal. Most times they don't even bother.

 

[The Bob]

My point is why select a complex assignment as proof of a one guy being a number hitter? There seems to be a line of thinking on this chat that if the other appraiser's value is higher, he is automatically a number hitter.

PS If my original response was harsh, I apologize. I too am sickened by the "fast Eddies" in this business. Unfortunatley, I think this industry long ago transformed into advocacy vs an unbiased estimate. If lenders/clients really wanted an unbiased opinion, they would order the appraisal before the fact, not after. Isn't it amazing the number of "rush" assignments we get. Seems the appraisal is the last thing ordered in a mortgage.

 

[Tim Hicks (Texas)]

Aren't all assignments complex. No really, I think that some appraisers think that a complex assignment relieves them of their responsibilities. I have found that some appraisers would prefer to "just make the numbers work" on a complex property to avoid the conflict of not coming in at 'value". Complex or simple our job is still the same. A$100,000 difference on a complex property is no better than a $10,000 difference on a simple property.

I am sure that the opinion that the other appraiser is a number hitter is based on my information. However, his value and his comp selection is not an accident or poor appraisal practice. It was calculated and quite obvious. It is the only way he could get over $400,000, so he did it. I have no respect for any appraiser who ignores the neighborhood sales when they are plentiful. If that is not a number hitter, then what is?

 

[Larry Lyke]

Tim --

Keep doing research until the money runs out, then call the Lender and ask for an advance on Part II... Oh, you say you haven't been paid anything yet?

My solution to your appraisal "problem" or "problem appraisal," if you wish, is to gather all the information you possibly can in a great big pile, then sort the piles a few times and use the best of what you can come with. Then write.

The reason for gathering as much info as you can is to do your best job AND prevent a Reviewer from coming up with something you didn't find.

At some point in the process there is finite reasoning!

You the Appraiser kind of have to set the boundaries. An absolutely clear, well-written appraisal will do the job.

Maybe you could call that "hangar" a 20-car Garage.

 

[jtrotta]

Tim;
40; 60 -80 miles does that really matter, after all if the "Potential Buyer" was in search of a quality property with a "Hanger" would he/she not go to those area's in search of what they are looking for :?: :?:

Now in my area, we have people that seek out "water oriented" property and they will travel the area from point A to point E - which covers approximately 20 miles; now it depends on where they want to go - but I've known folks that will do the 60 mile stretch, because the possibility ot the town amenities they are in search of will take them that far. This is an opposite example, but I would think if you can "pilot" a plane- will 20/40/60/ or 80 miles even matter :?: :?:

Just Hope your getting enough for the job- Good Luck 8)

 

[Tim Hicks (Texas)]

Good point, Mr. Trotta. I weighed that idea very heavily. However, this neighborhood is has its selling points that most areas do not. I am sure you have these type of additions in your area. It is a large, gated addition that is encircled by the Brazos River. There are river lots, lake front lots, golf course lots, orchard lots, air strip lots and many, many interior lots. People who move to this addition, move to this addition for its appeal. It is not expensive or high priced by some gated addition standards, but it has its own special appeal. There are several homes with airplane hangars, just no sales ever published. Most of these homes have retired airline pilots who moved here to retire. Every one of the homes were custom built and not offered on the open market and none have been re-sold. I can not create sales and using sales from other areas have little in common with this addition. I will add other sales with hangars and similar homes, but it could be argued that those homes have none of the appeal or location appeal of the subject and they certainly don't reflect the subject's market at all.

 

[Fred]

Kathy,
And the higher you appraiser, the more free drinks you get - and vice verse

 

[Anonymous]

Tim: Feel better now ?

I would try and go as far as necessary, to a similar community with the hangers w/homes. If not, use a cost approach for the hanger, and depreciate it, and attempt to determine a market adjustment for it. Also, is this A-typical for the area, or common ? Would the hanger be desirable by only a small segment of the market, etc. ?

The sad part, if you're right, is that FNMA is using values from guys like this for their AVMs. FNMA also doesnt know that there may have been a lower appraisal done recently, but lender & appraiser got together and did a better one, for them, higher ! FNMA also said they are going to tell Lenders to choose a review appraiser & review more of the original appraisals. Whaat ??? The fox choosing the security guard for the chickens.

Yes, inflated values are prevalent, by all that we read, from all over the US, but FNMA tells Congress we are just soreheads ! No one is listening. How do we get across to Congress ? To make things worse, the Foundation is considering a 7 hour exam on USPAP. If the number hitters can memorize an exam, they're in. Many others may be OUT.

I hear that the Nat. Taxpayers Union is concerned with possible inflated values. Maybe that could be our salvation.