I’d Be Better off at McDonalds
…they provide no documentation as to how their algorithm produces this indicated value…
I had to “jump in the pool” and see what these bifurcated appraisals are all about. The names have been withheld to protect the guilty.
I recently completed a “bifurcated” report for one of the AMC’s providing this type of service. The form is to be completed on their site and they recently upgraded to the “new and improved” report on their portal as of January 1, 2019.
The subject is sited in an urban location and while not an anomaly per se, does display features such as being one of the largest Ranch style dwellings, significant lower level finish and a considerably larger site amongst properties in its immediate market area. Client expectations are rather typical: 3 closed sales, preferably within 6 months, that bracket all of the subject’s value-related features. While this could be done, it produced an indicated range of value slightly greater than I prefer. However, this specific form only allows 3 comparables. Even though I actually added 5, only 3 could be used to reconcile value. While I need 3 specific sales to bracket, I’d have added an addition 1 or 2 in further support.
Of additional significant note is that during the cursory analysis and, according to MLS and tax records, the subject last sold over 3 years ago and was stated as such in the report. The field report provided, stated the subject to be in “average” condition with external negative influences for being sited within 3/4 of a mile from railroad tracks and an interstate. Imagine that in an urban location? Based upon readily available data, the subject was considered a Q4, C4 with no external obsolescence for purposes of my report. This specific report allows for value-related adjustments and produces its own indicated value. Because they provide no documentation as to how their algorithm produces this indicated value, I chose to weight the adjusted sales and override their indicated value with my own. I chose to add additional verbiage that I believed made me as USPAP-compliant as possible. They weren’t crazy about it, but didn’t request I remove it either.
This report paid $75. It wasn’t terrible and took approximately 1.5 hours to complete. I suspect if I was familiar with the software, the subject was in an urban location and I had “canned statements” relative to USPAP-compliance, prior services, etc. that it could been completed in 1 hour +/-. Not necessarily terrible, but no one’s retiring on these. And so, I thought it was the end.
Underwriting came back stating they found a recent sale somewhere online. I questioned the underwriter as to where this data was found. It took them 2 days to respond that “Sorry for the late reply. I’ll have to get back to you”. When processing was screaming for me to complete the “revisions” I told them of this correspondence. It was elevated to a “senior” reviewer who cited a recent sale of $XXX found online but, again, provided no information relative to where it was found. An online search found the subject with photos on some goofball site like Trulia, but it never stated it was listed nor for sale and no FSBO data could be found either. A search of the WI DOR Transfer Return Site did reveal it transferred recently, although no verifiable proof it was exposed to the open market could be found. The sale was so recent that the local assessor hadn’t analyzed it as of yet for arm’s length validity. They also wanted to know why my indicated value was well below their inflated and inaccurate assessed value provided, and suggested I adjust my condition from C4 to C3.
Long story short, I had no evidence of exposure to the open market and recent arm’s length sale, and appropriately discounted the recent sale. I also pointed out the almost 30% higher and inaccurate stated assessed value and the fact they could provide no significant data warranting changing my conditional rating coupled with the fact they suggest the field observations be extraordinarily presumed accurate. With the additional 2.5 hours I’d now be better off at McDonalds.
But it doesn’t end there. In an unbelievable twist I’m sure Mr. Ford would appreciate, the “new and improved” system doesn’t allow you to retain a copy of your work (can you say RECORDKEEPING violation). I questioned the senior appraiser about this. He stated the system was originally set up to deliver a PDF of your report directly to your email. However, an appraiser’s email account was recently hacked and they discontinued this practice. But, there’s a repository of your work accessible from your portal and you can download your reports from there. When I pointed out the fact that actually, there isn’t, or at least no links to said repository within the portal: Crickets.
As if the forms aren’t questionable enough and “revisions” are as much, if not more rampant than typical AMC field work, the fact you can’t retain a copy of your own work for recordkeeping purposes is the USPAP coup de grace. At least, for this AMC it is.
By Mark Ziegler, certified residential appraiser and owner of LandMark Valuation based in Two Rivers, Wisconsin.