Failure to Communicate

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Frederick E Rossiter

Certified Real Estate Appraiser at Residential Analytics, LLC
Fred Rossiter has spent the last 46 years of his life in the real estate industry as a State Certified Appraiser and Licensed Real Estate Broker, a custom home builder, investor and homeowner. Fred served as a Special Magistrate for the Lee County Value Adjustment Board for 6 years and is a Certified Collateral Valuation Specialist. He is a commercially licensed, instrument rated pilot and a USCG licensed Captain.Fred has served as a President and Director of two homeowner associations, built a community park and saved 40 acres of land from development for use as a wildlife preserve. Fred loves people, his family, real estate and the outdoors.
Frederick E Rossiter

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Language Barrier... What We Got Here is … Failure to Communicate

Realtor’s language is “local” whereas an appraiser’s language is universal… What we got here is … failure to communicate.

It’s a line from Cool Hand Luke … a great old movie with Paul Newman. Newman played a prisoner in a jail in the Deep South. The story was all about Luke Jackson, played by Newman, who was sentenced to two years in a Florida prison farm. Well, Luke was a free spirit who didn’t play by the rules and this angered the prison’s sadistic warden. In one memorable scene, the warden said, “What we’ve got here is … failure to communicate“. That line was listed at No. 11 on the American Film Institute’s list of the 100 most memorable movie lines.

Appraisers are interpreters:

Appraisers deal with this “communication problem” every time they do an appraisal. You see Realtors, the MLS and appraisers do not speak the same language. We have to interpret what Realtors say and then translate their language into a language that all the rest of us real estate experts in the world use.

Example#1: Realtors talk “square feet”. Appraisers, lenders, Fannie Mae, Freddie Mac, mortgage brokers, FHA, VA, HUD, underwriters … all the rest of us real estate experts in the world, talk GLA (Gross Living Area).

Example #2: Realtors will say they just listed a 5 bedroom, 4 bath two story in Dreamy Acres. Appraisers, and all the rest of the real estate experts in the world, look at the same home as a 3 bedroom, 2 ½ bath two story with 2 bedrooms and a bath in the basement.

Example #3: Realtors will input a 2,400 sf Bi Level into the MLS. Appraisers and all the rest of the real estate experts in the world see this home as a 1,200 st GLA home with another 1,200 finished square feet below grade.

Example #4: A Realtor will input a listing into the MLS with a mountain view. The appraiser’s interpretation is B;Mtn; a suburban location might be a N;Res: a finished basement might be 1rr2br1.1ba0o (1 rec room, 2 bedrooms, 1 ½ baths, 0 other rooms). Guess what a 4ga4dw means.

Example #5: Realtors have no field to populate in the MLS for “Condition” but appraisers are not given that luxury.  We have to give the subject, and all the sold comps, a condition rating of C1 thru C6.

The list goes on and on. You get the point.

Another interesting thing is that a Realtor’s language is “local” whereas an appraiser’s language, of necessity, is universal. A Realtor in Colorado will say a home has 2,753 finished square feet while a Realtor in Florida will say 2,753 sf “under air”. A Realtor in Kentucky would say that the home has 2,753 sf “heated”. Appraisers however, in all three states, will say the home has 2,753 sq.ft. GLA.

“So, what we have here is … failure to communicate” with Realtors and MLS on one side of the fence and appraisers, lenders, mortgage brokers, underwriters, Fannie Mae, Freddie Mac, FHA, and VA on the other side of the fence … all on the same page but speaking in different languages.

This “language barrier” can present problems:

The other day I had lunch with two old friends at Chillys. My friend Hal was a long time Realtor and my friend Jim was a seasoned appraiser. So, we all settled into a booth in the back of the restaurant and exchanged pleasantries, talked about our wives, our kids, and the Broncos.

I casually asked my Realtor friend Hal, “How’s biz?” “Well, he said, it would have been a lot better this month if Jim hadn’t blown one of his deals!” “Uh oh, I said, what happened?”

I just knew, the minute I asked that question, that I shouldn’t have gone down that road. I could feel this pall come over the lunch table.

Hal explained that he had listed this beautiful 4,000 square foot 2 story in Skyview Acres for $535,000. He said the home was built in 1963, had 6 bedrooms and 4 baths, a mountain view, a 2 ½ car garage, a shake shingle roof, and new appliances. Despite all that, Jim had come in $35,000 low which blew the sale! Hal’s face was beet red with anger and Jim’s eyeballs were rolling into the back of his head.

With a lot of trepidation, I turned to Jim and asked “What’s the deal”?

Jim, calmly explained that the appraisal “didn’t come in low, it came in at what the market value was. Hal had listed it too high”. Jim turned to Hal and precisely rattled off the facts: PA 56, EA 50, location Adverse;Industrial, View Adverse/Power Lines, 2S Trad, 3,000 sf GLA, 4 bdrm, 2.1 B, basement 1,500 sf/1000Fin, 1rr2b1.1b0o”. “Furthermore, Jim exclaimed, it wasn’t a 2 ½ car garage, it was a 2gd4dw!!

Well by now, both men had become rather exercised with beads of sweat dripping from their foreheads.

I turned back to Hal and asked, “Condition?” Without hesitation, Hal said, “Beautiful!”

Jim then turned to Hal and said, “Ha! FO!”

With that Hal stood straight up from his table, pointed his finger at Jim and said, “don’t tell me to F***k Off!” Hal then turned and stormed right out of the restaurant.

Perplexed by this event, I turned to Jim and asked, “Condition?”

Jim calmly said, “Yes, Functional Obsolescence, 35%!”

What we got here is … failure to communicate.

Frederick E Rossiter

Frederick E Rossiter

Fred Rossiter has spent the last 46 years of his life in the real estate industry as a State Certified Appraiser and Licensed Real Estate Broker, a custom home builder, investor and homeowner. Fred served as a Special Magistrate for the Lee County Value Adjustment Board for 6 years and is a Certified Collateral Valuation Specialist. He is a commercially licensed, instrument rated pilot and a USCG licensed Captain. Fred has served as a President and Director of two homeowner associations, built a community park and saved 40 acres of land from development for use as a wildlife preserve. Fred loves people, his family, real estate and the outdoors.

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9 Responses

  1. Avatar Carl says:

    LOL! Loved the article!

    We were more or less speaking the same language until the GSEs came up with the UAD language that no one seems to understand without the UAD definitions addendum.

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  2. Avatar SB says:

    Rels Valuation Scope Creep
     

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  3. Avatar Cotton Cornell says:

    A better movie analogy would have been the line from forrest gump. “Stupid is as stupid does”.

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  4. Avatar Jack Of All Trades says:

    “What we’ve got here is failure to communicate. Some men you just can’t reach. So you get what we had here last week, which is the way he wants it; well, he gets it. I don’t like it any more than you men”.

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  5. Avatar Dave says:

    Realtors are SALESMAN. Period. Sales people always will try to over impress people. We appraisers have USPAP, a one inch think book we must obide by every page or have the wrath of the state board upon us. Realtors have no such book which hold them accountable. We appraisers have to be uniform throughout the country. This article hits it on the head. Very few Realtors note concessions in the MLS. I call them up and say, your listing I appraised had $5,000 seller give backs and you did not post it in the MLS when it closed. They say, “and how does that benefit me”……

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    • Avatar Bill Johnson says:

      Or how about the opposite Dave. Meaning they input say a $10,000 concession, but in reality the concession (repairs, agent commission reduction, etc.) was just part of typical negotiations and should not result in a full or partial net reduction on the sales grid.

      Seek the truth.

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  6. Bobby Jones on Facebook Bobby Jones on Facebook says:

    Realtor or better yet someone that opens the door is not qualified to write a description of a property they have financial gain

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  7. Avatar Dave says:

    That could happen Bill. But what I am witnessing are buyers going through FHA and paying $110,000 for a home listed for $100,000. Then having the sellers pay $10,000 towards their closing costs, prepaid, etc. The house was already listed by a Realtor on the high end then the buyer decides that isn’t high enough of a fair price and says how bout $10,000 over list and pay my closing costs since I don’t have two dimes to rub together! I deduct that every time if I use that sale as a comp. (That is if the Realtor actually notes it in the MLS) Don’t know how other ethical appraisers handle that…. always call the Realtor and ask why it sold over list price. They almost always say the sellers paid towards the closing costs. I tell them to kindly post it in the MLS. Why are appraisers held accountable for noting concessions, when the Realtors are not. Makes no sense to me.

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    • Avatar Bill Johnson says:

      I get it Dave. My local MLS has a heading that says concessions, but unfortunately there is no consistency from the agents nor appraisers regarding this issue. If an agent inputs a $10,000 concession amount but in reality the seller conceded on the final price by $10,000 (typical negotiations), for our purposes this is not a true concession. Conceding on price in lieu of repairs, means the final price takes into consideration the current condition, but does not mean a single line item adjustment is warranted on the sales grid if used as a comp.

      Where it gets interesting, is that you and I may seek the truth and track down the agent for the meaning of their concession amount (not warranted in example above), where others simply use the $10,000 in full or as a partial adjustment (market reaction dependent). If enough others input the $10,000 (in error), then under the watchful eye of big brother (UAD / portal), you and I will be the ones varying from a panel of our peers.

      Seek the truth.

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Failure to Communicate

by Frederick E Rossiter time to read: 4 min
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