If this were NOT SO their would be no IN-formed parties in the transaction.

Lots of circumstances exist where sellers dump a property “for instance to take distant job, to sell a property they can’t afford to repair, to take care of aunt Bernice, etc..

Lots of circumstances exist where buyers pay over market; in a rapidly moving market ” just after the interest rates sky rocket, When a new industry moves into town and their is no measure of how high is high, etc..

The Government took responsibility in the late 60′ for the affects after closing down several Military Bases. They paid some relocation losses in anticipation of lowering values. These reports would”t fit on a 100-4 or FHA form.

Not all properties need to be appraised, the insistence of an appraisal is a needless expense. The A.I.R.E.A.’s and the subsequent Appraisal Institute’s lobbying insured inspired workmanship from a plethora of new residential appraisers.

A range of values as a substitute for a single value is a cop out. The form report describes terms exact terms for the loan and or sale; windows. re glazed, new roof, additional property secured by the lender, and a lots of other stuff.  The lender does not make a loan to a generality, the institution makes a loan to a family who work or, and have substantial assets.

A range does not match with the rest of these particularities and the report an attempt to generalize.

don was one, 57 years

The 1004 form may not be adequate.

don

Always cash the check before delivering the report. Come up with an AGREED value that reflects the value reported and is clearly defined in the contract. For instance (the 1935 Cadillac was part of the down payment) and define the sources. Your clients will be as honest as you keep them, and your collections will reflect your work. Be prepared to defend yourself in court !

don

Matt, numismatic euphemisms aside, that is NOT what an appraiser is hired to do; NOR what any reputable lender does.

I exclude ALL reverse mortgage lenders from this as I’ve yet to find one that is reputable.

Anyway, lenders make money by making loans. Most are insured conventional (pmi); or insured FHA / Guaranteed VA. Frankly they don’t give a damn whether the value is at the high or low end of a supported range. It doesn’t change their costs or profits more than a very few dollars.

Where you may find loan to value shenanigans is with commercial paper; portfolio loans, hard money and reverse mortgages where there IS a benefit to quoting fees on a higher LTV and then delivering a lower LTV loan. Otherwise, generally the higher the loan is; the higher the (nominally) the profit.

Clint there is a lot of merit in  your contention if this is a single event with an offer well above its asking price. “Well above” asking requires more proof of value in my mind. 10%? 20%?

In cases where there is a demonstrated shortage of offerings; normal 90 day +- marketing periods have dropped down to 2 or 3 days or “as soon as the sign went up” and (credible) comments from agents like “this is the third or fifth house they made an offer on in this school district/Sub Area/City  but each time they have been outbid” become common there is a good chance that “market value” has or is going up.

Measuring it and supporting it adequately becomes more difficult. If each of my closed sale comparables also showed a higher than asking price and currently pending sales are listed ‘close’ or above my subject property coupled with there being no active (similar) listings lower than the sale price I will look at the entire body of information. Especially where I can document an increase trend in closed sales.

Where my highest unadjusted sale or listing was $490,000 and my highest adjusted sale or pending sale is $495,000 I HAVE and may again someday appraise at the pending sale price of $500,000 “giving dominant consideration to the subject pending sale itself which is 1% above the highest adjusted sale and 2% above the highest unadjusted sale but is 3% to 5% below the next lowest priced competitive comparable listing.”  Or alternately if no listings at all exist Id state the trend and market data support a value opinion rounded up to the next most significant market number; or at the sale price.

Am I (improperly) appraising ‘to the sale price’? No, but the market data supports concluding at the sale price. I’m not so good as to be able to tell market participants that they are paying 1% above market value based on artificial lender constraints. I have made this argument direct to FNMA reviewers prior to loan funding and had them concur.

Consider this twist-listed for $500,000 bidding started at the low ball offer of $475,000; jumped right away to $490k and had three at or above $500k but they took the $500k over the $510k because that higher priced guy wanted 10K in concessions and the sellers were concerned about his ability to qualify for the loan. Orange County California circa 2005-values were clearly still rising there for another year and a half to two+ years right up to November 2008.

Um, no. The only people that determine what market value is are the market participants. The only ones that verify and analyze the participants collective  actions and develop a credible opinion of what market value is based on the actions of those participants are appraisers.

Brokers also probably have a pretty good idea of what market value is, as do the owners. Whether they will tell us that truthfully or not is another story.

Concur 100% John. We are appraisers and are known to quibble once in awhile.

Tom there is nothing in USPAP or Dodd Frank that says you cannot talk to an involved party. Just the opposite is inferred in contract analysis requirements. What is prohibited is discussing the clients personal non public information without their consent. The other parties we may meet or speak with are prohibited from using undue influence (meaning improper influence) to affect our development of an appraisal.

IF the homeowner and agent truly believe the property to be worth “X” dollars, I EXPECT them to try to convince me! IF they do it by use of appropriate and relevant comparable sales, then I am grateful for the assistance in helping me assure I’ve considered ALL AVAILABLE data as required under USPAP. If they tell me about the direct FSBO across the street that was sold after three open houses and a for sale by owner sign being on the lawn for three weeks, I appreciate the information since it wont show in mls. I CAN walk across the street and attempt to interview the involved party myself.

And, where they DO attempt inappropriate pressure I’m a former Marine, always wear my Big Boy pants to appraisals, have been in business over thirty years as a full time appraiser and am completely capable of either ignoring or declining to be pressured BY ANYONE.

Once, in response to “I’m paying $3,000 for this appraisal and as far as I’m concerned I have paid for it to come it at the value I need.”

“Dr. Anonymous, here is your three thousand dollar check back. When I return to the office I ‘ll let the owner know your views about what the payment of the fee means to you and I’ll ask if he prefers to cancel the order or if he can reassign it; or would prefer to do it himself. I cannot proceed under conditions where you tell me you believe my acceptance of a fee has guaranteed you a desired result.” Heck I had THAT conversation before FIRREA under The AIREA old USPAP.

On our State exam, the question was…”Does sales price ever equal sales price”. The answer is No.

You must NOT be an appraiser if this concept eludes you.

Which apparently it does.

And since “you cant listen to me anymore” your deaf, dumb and most likely blind.

House values go up (or down) based on interest rates and salaries people make. Look at the graph of salary increasing in the country over 40 years and it almost exactly matches the increases in real estate values over 40 years.

When people get paid more, they can afford more of a mortgage which in simple terms, they can offer more to buy a house and real estate sells higher….when interest rates are increasing, they cant AFFORD to offer more, so they have to offer less. Which drive down house values.

No one but appraisers figure out what the market value is. Owners , buyers and real estate agents do not do appraisals. They aren’t trained. They can get close, but are not appraisers.

let’s s stop with the dramatics. i bet you’re appraised values verse sale prices is in the very high 95+% ok range. oh wow, you hitting the sale’s price 95+% of the time, you’re one of those appraisers hitting the realtors number.

as they say, fraud? PLEEEZE. i can’t listen to you any more chris, on this cruise of the damned righteous.

Appraisers analysis the market and are SUPPOSE to appraise for market value,

NOT COMMIT FRAUD TO REACH A SALES PRICE.

That is what OUR jobs are. We appraise current market value with available data from the MARKETPLACE.

i disagree with you. buyers and sellers determine market value. we only affirm it mostly, deny it sometimes. why then do values keep going up, higher & higher over the long term, because appraisers are over market valuing.

appraiser are basically here to stop value fraud. sorta like the walking police man preventing crime.

good article, but some appraisal things becomes over reacted by many people who turn extreme in dictating the rules to appraisers, especially some non existent rule they think exists. sounds like the twilight zone.

No one else. Its what we do. Every day of our lives!

Yes!! A range makes much more sense

TLDNR

The appraiser is held to a higher standard because they have E & 0 insurance, the banks security. Most buyers don’t understand it’s an opinion, they think it a fact. I think you need to face facts, one day a company is going to develop software where an employee pushes a button an in 30 seconds has an appraisal.