Tagged: comparable sales

Pictures in Private Neighborhoods Can be Tricky 10

Photos in Gated Communities Can be Tricky

Let’s talk about assignments in private neighborhoods, gated communities, or secure communities. Rich folks buy, sell, and refinance their homes, too, so they need appraisals. You have an assignment in a security community. There is security at the entrances, you must be on security’s authorized visitor list to get in, and your permission to enter this private community extends solely to visit your subject. So, here is the question: while inside this gated, secure community, do you also drive around and take photos of the comps? Now, even though you are reading this, I can see you looking at me...

Verifying Property Sales Data Is Key Element in Doing Appraisals Correctly 10

Verifying MLS Shown Sales Price

Verifying property sales data is a key element and requirement in doing appraisals correctly… Verifying property sales data is a key element and requirement in doing appraisals correctly. We cannot just assume the MLS reports sale prices correctly. One aid to help do this is by using one of the ‘data download’ software providers which prefill many property data items in the report comparable grids. These companies have direct interties with the local MLS (most, not all across the US), and public data from either your jurisdiction recording or assessor office, or an amalgamation company such as Realist. Two ‘data...

Is That an Arm’s-Length Transaction? The Necessary Analysis 14

Is That an Arm’s-Length Transaction?

USPAP does not define the term arm’s-length transaction. Fannie Mae also lacks such a definition. Yet, both of them call for the appraiser to use only arm’s-length transactions as comparable sales… How often do we appraisers get into the mode where we think we know it all? Occasionally, do we need to step back and look at the way we do things, just to make sure we are not missing something? Is what we know to be true and correct really true and correct? I raise this issue relative to the concept of what an arm’s-length transaction is. Are we...

Time Saving Shortcuts Undermines Our Profession. Skip the Comp Photos 48

Skipping Comp Photos, Suicidal Shortcuts

I refuse to undermine my own profession by pretending that time saving shortcuts are always acceptable just because they are ‘more modern and progressive’. I know how long it takes to produce USPAP compliant, credible appraisal results. I charge accordingly for my time. I make no effort to compete on fees with half assed hybrids, evaluations, or single approach partially performed field work. Respectfully, neither should anyone else. Please stop undermining our own profession…. Recently The Appraiser Coach posted an article and links to a podcast suggesting its no longer necessary to photograph our comparable sales. I wrote a counter...

Existing Regulatory Burden on Appraisal, a Proven Failure- System Reform 6

Appraisal Reform or System Reform

It is my hope that the Subcommittee on Housing, Community Development and Insurance consider long-term impact. The existing regulatory burden, a proven failure, may insure a repeat of the past. The body of a letter to the U.S. House Committee on Financial Services about systems reform. Appraisal reform or Appraisal industry reform? It is critical to understand that ‘appraisal’ does not equal ‘valuation’, or risk analysis, or anything else.  It is a precise definition of a nebulous product. The current U.S. House Committee on Financial Services is asking the question: “What’s Your Home Worth? A Review of the Appraisal Industry.” I believe it is...

Review Appraiser Flawed Review... Phony Complaint Against Appraiser 14

Phony Complaint Against Appraiser

…a laundry list of ‘pile on’ purported USPAP “violations” were fabricated deriving for the above oversights ‘confirmed’ by the out of area review appraiser… In fighting or appealing a false complaint filed against you as an appraiser, truth, factual evidence and professional competency is no longer enough! More important than all these things, is conformity to the detailed technical rules of a state’s administrative law procedures. In short, in many if not most cases, appraisers MUST HIRE AN ATTORNEY to represent them before any administrative board. Anything less, is playing with fire and your professional career. Worse, E&O won’t cover...

Different Properties on the Same Form? Are you Appraising the Bulk... 11

Different Properties on the Same Form?

Are you appraising the retail values of 10 sites to 10 different owners? Are you appraising the bulk or discounted market value of the 10 sites to a single purchaser? Can the Same Form Have More Than One Property on it? Lots of folks have asked me, “Dustin, can I appraise two different properties on the same appraisal report at the same time?”. Now understand I am not a USPAP instructor, I am an appraiser, so I’m going to answer this question as best I can. The question before us is legitimate, and one which I had to answer recently....

Should We Real Estate Appraisers Stop Making Adjustments? 43

Should Adjustments Actually Be Done?

How much credit should we give ourselves when it comes to making adjustments? Making adjustments is controversial. USPAP says nothing about adjustments – it does not require us to make them. They are a GSE construct. So, should we real estate appraisers stop making adjustments? Clients pay us for opinions of value, so our adjustments are really opinions based on what the market tells us (or that’s what we should base them on), but they are still opinions we form; they are not facts we find. So, maybe, should we stop making adjustments? We derive our adjustments from sources such...

USPAP Everyday Violation... Are You Violating USPAP Every Day? 15

Are You Violating USPAP Every Day?

Are you in “violation” of USPAP? If you pick comps the old way, you may be violating USPAP every day! The old way of selecting data worked well for the old days. Gather seven or eight that look good, go look at them, make a couple of phone calls, and pick four or five for your report. That was the way I was trained. That was the way the Appraisal Institute courses taught me. When I took the AI demo report course, three words were drilled into me: Explain, Justify, and Support. Then I took the required USPAP course. (Back then it still belonged...

Crystal Balls Don’t Work When Reporting Market Trends! Nor does the MC Form! 8

Crystal Ball & PFA Techniques

PFA figures & opaque crystal balls don’t work when reporting market trends! Nor does the MC Form! Appraisers, by now you’ve heard that FNMA finally has decided that their 1004MC form is basically worthless. That form is no longer required in appraisal reports for properties sold to FNMA, as of August 7, 2018. poorly designed form which never has reported accurate trends…However, sidekicks in mortgage lending have not come to the same conclusion… yet. Hopefully, in short time, they will also remove the MC ‘inclusion’ requirement in reports of this awful, poorly designed form which never has reported accurate trends – despite the...

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