WHY they were the best comparables?

[Will Granger]

Yes ma'am! I guess I could say there haven't been enough transients in the neighborhood to get people to move or something, but I'll do whatever you tell me. :wink:

 

[Tom Hildebrandt]

Jo Anne and others

Lending guidelines require selection of "the best comparables", not USPAP. The best argument for a given sale being the best comparable is the least net or gross adjustments. As Jo Anne points out, explanation of our opinion is what makes an appraisal report insightful and meaningful to a client. The mere statement of what we believe to be fact, ie, "the best comparables" may not be sufficient.

As a follow on point, USPAP Std 1-4(a) requires that "when a sales comparison approach is applicable, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion." Nothing is said about best sales.

As I have posted before, in theory under USPAP, you could come to an appropriate value conclusion by making appropriate adjustments to the Washington Monument, the Taj Mahal and the Louvre (assuming they had sold as arms length transactions) when the subject is a duplex apartment located in a redevelopment area in my home town.

Hardly the best comparable sales as the net and gross adjustments would be impressive but in theory, if you made appropriate adjustments, you could reach a reasonable value conclusion.

Regards

Tom Hildebrandt GAA

 

[Bill S]

Can't you just remove the addendum from the report? Or is this a requirement from the lender.

 

[wade3333]

All this info is appreciated, but as long as I say 'these were the best comps found for this subject" and it suits the UW, I plan to continue. Wade

 

[Carnivore]

Wade,

If by chance your comment fails tell them to read paragraph one of your certification.

Makes you wonder what people are thinking aobut when they look at your reports.

he he

This is why I like the new alamode addendum. It basically puts into kindergarten language what your report already says.

 

[The Bob]

Jo Ann,

I understand why you may include such addednda, but in my experience, the client really doesn't care for all that. After all you are doing a "Summary Report". Before you jump on me, I know there are exceptions were certain items need to be addressed more fully in an addendum.

As regards the original question posed, "Why", i try to explain in as few words as possible. For instance "All 3 comparables are recent sales of similar size and style homes with comparable features and appeal and are considered the best currently available" or "Appraiser recognizes that guidelines for time, distance and net/gross adjustments were exceeded. There were few recent sales of similar homes available for comparison. The sales used are consided the best available for anlayizing the value related features of the subject". One important note. I never include verbiage just to keep an UW off my back, I really try to answer the question. I get very few calls to address something in a report, usually its something dumb I overlooked. :wink:

 

[Tim Hicks (Texas)]

Shouldn't it be the most "similar" comparable sales? It seems that the "best" comparable sales would suggest you were cherry picking the highest sales.

 

[airphoto]

Tim(TX),

Better yet: "most appropriate"

 

[Carnivore]

Why not just cut and paste this from the standard Fannie Mae cert page:

I have researched the subject market area and have selected a minimum of three recent sales of properties most similar and proximate to the subject property for consideration in the sales comparison analysis and have made a dollar adjustment when appropriate to reflect the market reaction to those items of significant variation. If a significant item in a comparable property is superior to, or more favorable than, the subject property, I have made a negative adjustment to reduce the adjusted sales price of the comparable and, if a significant item in a comparable property is inferior to, or less favorable than the subject property, I have made a positive adjustment to increase the adjusted sales price of the comparable.

 

[Alan Simmons]

I actually think the term best comparables is overtly disingenuous. It allows a person to be critical without having to do any real thinking, and it makes everyone else defensive.

1. It implies ALL Appraisers would cheat if not for the oversight of others.

2. It implies that there is a one size fits all strategy for appraising (, exact science). That irrespective of the Appraiser, the same comparables should be used.

3. It implies that appraising is easy to master and that any fry-flipper with a checklist could do better. Why should they bother reading your report and analysis.

4. It implies that Appraisers are form fillers, because picking comparables is a no harder than finding the three closest sales.

IMHO, Comparables should be as much a function of the market as a representative of the subject. Markets are not always defined by subdivision boundaries, et al. Sadly, I think too many end-users can not see the market for the sales.
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