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Old 07-21-2012, 09:52 PM
 
265 posts, read 340,107 times
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Thanks yousaf, I appreciate your help.

This is the only analysis he provides:

"Each comparable is from the subject's area and is comparable to the subject property in location, style, quality of construction, and amenities. Each sale is adjusted for any variable for a final adjusted sales price for each comparable. Each comparable sale is given weighted consideration in final indication of value by the sales comparison approach. Comparables #1,#3,#4 are from the subject's complex and comparable #2 is from a directly competing complex."


Comp 1 - Sale Price $154,000 Adjustments +4000 Adjusted Price $158,000 +2.6%

Comp 2 - Sale Price $206,200 Adjustments -7600 Adjusted Price $198,600 -3.7%

Comp 3 - Sale Price $140,000 Adjustments +6000 Adjusted Price $146,000 +4.3%

Comp 4 - Sale Price $154,000 Adjustments +4000 Adjusted Price $158,000 +2.6%

Other listings:

1 pending sale listed at $159,900 (foreclosure) Closed day after appraisal at $155k

1 active listing at $169,900
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Old 07-21-2012, 10:00 PM
 
249 posts, read 723,593 times
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Default Appraisals

Quote:
Originally Posted by NativeJr View Post
I have had two houses appraised in the past year and am confused as to how appraisers use comps to come up with an appraised value. In each case, the comps used appeared valid and price adjustments were given that seemed appropriate. Both subjects were nicer than the comps so the price of the comps were adjusted up. However, the appraised value was lower. In one case significantly lower.

How does an appraiser use the adjusted sales price of a comp to come up with an appraised value?
It does not take a rocket science degree to do this job. Many are unqualified and don't care.
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Old 07-21-2012, 10:01 PM
 
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That's pretty generic, and useless, language.

The wide range of adjusted sales prices seems a little large. Did the appraiser explain anything about the sales that would indicate the difference between Comp #2 and #3 being so far apart?
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Old 07-22-2012, 12:03 AM
 
265 posts, read 340,107 times
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No, no explanation at all. The only "analysis/explanation" he gave was what I quoted in my last post.
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Old 07-22-2012, 03:03 AM
 
61 posts, read 124,815 times
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Quote:
Originally Posted by yousah View Post
That's pretty generic, and useless, language.

The wide range of adjusted sales prices seems a little large. Did the appraiser explain anything about the sales that would indicate the difference between Comp #2 and #3 being so far apart?

The language may be useless to you. However, this is standard language which is understood by the intended user, the bank. And, it sounds much better on a report than " There's a big difference between Comp#2 and #3 because I went to another complex that sold for about a third more, just to be able to bracket the sales price and the adjusted price and get the value higher than I could if I didn't use it."
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Old 07-22-2012, 09:01 AM
 
3,029 posts, read 6,909,639 times
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Quote:
Originally Posted by lls1662 View Post
The language may be useless to you. However, this is standard language which is understood by the intended user, the bank. And, it sounds much better on a report than " There's a big difference between Comp#2 and #3 because I went to another complex that sold for about a third more, just to be able to bracket the sales price and the adjusted price and get the value higher than I could if I didn't use it."
Application of common sense to the analysis is sometimes required by the user. When you do that, it's pretty easy to see why he came up with that market value. That said, he should have said the obvious for those who can't figure it out for some reason. "The sale that was not in the complex and had an adjusted value well outside of the range indicated by the other sales that WERE in the subject complex, is given little weight".

Of course a "self-contained" appraisal report would have said that, but I'm doubtful anyone wants to pay $1500-$2000 for a residential appraisal.
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Old 07-22-2012, 11:04 AM
 
265 posts, read 340,107 times
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Quote:
Originally Posted by ETex2 View Post
Application of common sense to the analysis is sometimes required by the user. When you do that, it's pretty easy to see why he came up with that market value. That said, he should have said the obvious for those who can't figure it out for some reason. "The sale that was not in the complex and had an adjusted value well outside of the range indicated by the other sales that WERE in the subject complex, is given little weight".

Of course a "self-contained" appraisal report would have said that, but I'm doubtful anyone wants to pay $1500-$2000 for a residential appraisal.
I think maybe you are assuming that I am a real estate agent, banker, or mortgage broker or someone who should otherwise know this information. My guess is that maybe you are an appraiser or some other real estate insider.

For some reason, my personal quest to find out exactly how an appraiser uses the adjusted values of a comp to determine an appraised value has obviously struck a nerve with you.

If you will re-read my previous posts, I do not believe that I have in anyway criticized the appraisal or the appraiser.

Neither have I indicated in anyway that I feel he should have used comp# 2 ($207K adjusted to $198K) to arrive at a higher value for my place. As a matter of fact, I personally do not feel that he should have been included this as a comp at all. Comp #2 is a 2bd/1ba townhouse with a garage in the Virginia-Highland neighborhood of Atlanta, a trendy entertainment district (hence the increased value).

My condo is a 2bd/2ba, garden style apartment in Morningside across from the Piedmont Park expansion in Atlanta. It is in a 202 unit, mid-rise complex (3 floors) re-developed as condos in 2004. There actually is no other comparable property in the "midtown area" of Atlanta. When it was re-developed in 2004, all 202 units sold out in less than a year with prices ranging from $169,900 to $212,000. My unit is in the most desirable area of the property and arguably one of the nicest units with many upgrades. When I bought it, I negotiated at great deal from the developer, $169,900. Between 2005-07, re-sales happened in a matter of days to weeks at a hefty profit.

Today, the complex is still in fairly high demand. Units sell in a matter of 1-2 months although at a loss for most people.

If I was criticizing the appraiser, I would have brought up another 2bd/2ba garden-style, condo conversion (approx. 40 units) in Virginia-Highland that sold last month for $167,000 that the appraiser did not use. It is an absolute dump and the type of buyers in my complex would not even consider buying there. Yet it is about the same age, same square footage, same number of bedrooms/bathrooms, same school district, etc. My agent provided this sale as a potential comp to the appraiser but for some reason, the appraiser rejected it. Using that comp, I think the appraiser would have had to value my unit much higher.

Based on the adjusted value of the comps that I believe he gave the most weight, if he had appraised my unit $158,000, I would have not had a question and would have never started this thread.

So please, Mr. ETex2, unless you can directly help me with an answer to my simple question, please leave the discussion to those who might actually seem to want to help this lowly home owner try to figure this out.

NOTE: I put "midtown atlanta" in quotations because although people (including my realtors) wrongly call this area midtown. The subject is in Morningside near the border of Morningside, VA-HI, and Midtown.

PS: I have asked my realtors and they have no clue. I have also sent a polite request to the appraiser and have not gotten a response.
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Old 07-22-2012, 12:02 PM
 
265 posts, read 340,107 times
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Quote:
Originally Posted by ETex2 View Post
Obviously, most weight was given to the two that adjusted to $158K offset by some weight given to the low range because foreclosures are having an impact on the market. Perfectly reasonable to me.
This is my ASSUMPTION too. But why did he just not say this in his analysis; oh, I know, you say he did I am just too stupid to understand it.

While I understand an appraiser's client is solely the mortgagor, I think an appraiser should also understand that his work is going to be viewed by both the buyer and the seller. The language of his report should be such that an average person outside his field of expertise would have little difficulty understanding his conclusions.
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Old 07-22-2012, 12:45 PM
 
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You bring up an interesting point, and one that is argued among appraisers themselves. The report is supposed to be understandable by its intended users, but who those intended users are is sort of foggy. Appraisers know that their report will likely be provided to the borrower pursuant to lending regulations. Does the appraiser then have an obligation to those people? It's arguable, even though the Fannie appraisal cert pages state that the lender is the intended user. However, some state licensing boards interpret the borrower to also be an intended user because the appraiser is fairly certain that they'll eventually get a copy of the appraisal.

This situation has been made worse with the UAD specifications which are basically a set of pre-determined standard abbreviations for completing the form. Even appraisers have a hard time remembering the abbreviations. So how is any intended user supposed to understand the report if so much of it is encoded?

Most of us now include additional pages in our appraisal that have the abbreviations interpreted so that we can't be accused of reporting an appraisal that is not understandable to the intended users. It's just another situation where Fannie does their own thing, oftentimes in violation of USPAP, and leaves appraisers and regulators to mop up the mess.
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Old 07-22-2012, 02:17 PM
 
265 posts, read 340,107 times
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He did provide a list of abbreviations and that was helpful to cross reference. Overall, the report was fairly easy to read and understand. The only thing that I had difficulty understanding was how he used the comps to arrive at the appraised value.
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