Tagged: adjustment

Reconciliation, Painting a Picture of the Problem & the Solution with Words 9

Paint a Picture with Words

The reconciliation is precisely the place we want to avoid any boilerplate… A common complaint among couples is a lack of communication. “He should have known I wanted that bracelet for my birthday” “She should have known I wanted to have sushi for dinner” “She should be more considerate of my feelings”, etc. How are we supposed to know these things? Are we mind-readers? It would be much easier if we would somehow communicate our wishes with our partners, without having to come right out and say something, but at the same time, it takes away from the spontaneity of...

Importance of Including Sales Price Trend Graph in Appraisal Reports 2

Importance of Graphing Sales

Scatter graph can help you “visualize” the trend of sale prices over a time period… Appraisers, I’ve been including ‘comparable’ price trend graphs in my reports (using Excel) since 2008. The graphs are based on a chart of MLS sales in the subject’s neighborhood, and can be from 1 to 5 years prior to the report Effective Date – based on housing density and number of sales. (I work in urban, suburban and rural areas.) A Scatter Graph can help you “visualize” the trend of sale prices over a time period. It can also show questionable outlier sales that you...

Lender Contributions FNMA Policy Adding Fuel to the Confusion... 6

Concession Reporting Confusion

…how are these "lender contributions" identified… Appraisers are ‘required’ to report comparable sales or financing concessions that benefit a borrower in the GSE form appraisal report, on the second line in the comparison grid (as a negative adjustment). Secondly, for subject properties, appraisers are ‘required’ to report any concession benefiting the borrower on page 1 of the report form. Subject concession amount is NOT entered on the Comparable grid. Well now, FNMA has issued a modification to their Selling Guide (which takes effect as of 4/03/18) – SEL–2018-03 – (I have added type face enhancements): Lender Contributions With this update we are...

Rounding of Adjustments Because We Are Just Not That Good 16

Adjustment Question

Rounding of adjustments is perfectly acceptable. Would someone kindly, and logically, explain to me why the ‘Site’ is adjusted precisely at $0.20 per square foot, down to the nearest dollar, but all other adjustments are rounded to $50? Are ‘we’ appraisers really that good, where we can divine buyer motivations or values (i.e., adjustments) as accurately as that?  In other words: “Well, I believe it’s worth exactly that much.” Usually I see this kind of adjustment practice to the nearest dollar when applied to the Gross Living Area and below grade areas, which is also screwy (IMHO).  This is the...

Pendings Can Reveal Market Trends - Use of Graphs in Appraisal Reports 5

Graphing Using Spreadsheet – Including Pendings

Pendings can reveal market trends, turns and current activity… Appraisers, How many of you use visual graphs in your reports to demonstrate sales (and Pending) trend data? This can be a very important tool to convince your clients that you really have a good understanding of current valuation issues. I am indebted to David Braun, Patrick Egger, Steve Smith, George Dell, Anthony Young and Joe Lynch (among others) for their presentations about this key feature we can utilize. Frankly, using spreadsheets and their built-in graphing functions is something every appraiser should learn. I bring this up because an appraiser peer was...

Concession Adjustments Missing in Appraisal Reports 41

Concession Adjustments Missing

Concession Adjustments are expected to be made… Appraisers, As noted previously, I ‘observe’ various reports from various sources. A new one arrived last week. In looking over the grid, I noticed the concession adjustments are missing in the grid, as shown below. Commentary continues below the image. The appraiser correctly shows the concession amount in the left portion of the comp grid (Comp 1 & 2 – Green Arrows), but does not put a corresponding adjustment for the concession in the actual grid column (Red arrows). This is NOT the first time I have seen this in reports. Apparently this...

Weighting Process & Gridding of Comparable Sales - AppraisersBlogs 2

Results of Comps Grid Placement Survey

Weighting Process & Gridding of Comparable Sales Couple of weeks ago, I sent out a survey to NW WA State appraisers asking how they organize the comps grid page(s) on completed reports. Of the appraisers emailed, approximately 10% responded. Thank you. I did a limited distribution to keep my compiling time to a minimum, but I wanted to share the results with appraisers across the country as an FYI. I also sent a similar query to review appraisers I know. I offered 6 possible ways to do the grid, but as often happens, several appraisers wrote back saying they did it differently...

Photographs in Reports & 2 Refers 12

Photographs in Appraisal Reports

Photographs, 2 refers & Nat’l RE Appraiser’s Day… I’ve been asked to formally review a recent report. When looking over the report pages, the subject photo pages contain a mix of horizontal and vertical photographs, about half ‘n half. And there are lots of subject photos. Bear in mind, most report photo pages are formatted for horizontal photographs. It appears to me the appraiser used a smart phone for photos, as there would be no normal tendency to hold a regular camera vertically except in rare occasions to emphasize height of some feature. But people do that with phones. The...

Is There a Fourth Approach to Real Estate Value? 17

Is There a Fourth Approach to Real Estate Value?

I want to talk to you about the fourth approach to value… …and specifically an occasion on which it truly saved my bacon. Now, I know a lot of you real estate appraisers out there probably started chuckling as soon as you read the words ‘fourth approach to value.’ If you did, I get it, believe me! I used to be the same way. Over time, however, I’ve grown to see how it can often be a vital part of the valuation process. Let’s have a quick recap for anyone who’s either forgotten the fourth approach, or never learned it...

Rules Check Software 6

Rules Check Software

If the ‘story’ can be told using 3 comps, why are 4 or more really necessary? Folks, As you are probably aware, all of our appraisal reports receive an initial examination electronically. There are a number of businesses which have written and provide to the industry various types of ‘rules check software.’ This actually began in the early 1980’s by the appraisal computer software pioneers who wrote programs to ‘check’ reports for inconsistencies. I just learned about one such ‘rules check’ company, and the results they’ve seen using their software – below. They even admit to users that the users can ‘mine’ reports...

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