Appraisal House Blog

Great news for appraisers!
January 20th, 2009 10:06 PM

I am very excited today because I found out that we NO LONGER NEED TO FIND AND USE THE "BEST" COMPS IN OUR REPORTS!  Nope, it looks like that old, outdated method of choosing the most comparable sales is going the way of the wooly mammoth.  From now on, the only important attribute of a comparable is that it MUST HAVE SOLD IN THE PAST THREE MONTHS.

Think of how much easier our life is going to be now!  We don't have to worry about stupid little things like proximity, or similarity of quality, age, condition, lot size, age, or even size.  So feel free to go off the charts with your adjustments, because that is okay now!  As long as they sold in the past three months, they are automatically now your best comps.

Of course you are thinking, "Mike, you're losing it.  The most recent sales are not automatically the best sales.  That's crazy talk!  Often sales that are older are much more similar and much better indicators of value.  Who would think that a 3,000sf house built last year is the best comp for a 60 year old 1,900sf home just because it was a recent sale?  You just need to make sure that the area has not experienced a decline in values, or is experiencing extended marketing times which may adversely affect the Subject as compared to those older sales."   

That, unfortunately, is 2008 thinking.  You need to bring yourselves up to date!  There is a new paradigm now!  At least according to the underwriters I have been dealing with lately, who refuse to accept an appraisal with 2 recent sales and three over 6 months (but less than 9 months) that were the EXACT SAME FLOORPLAN, and after I had provided extensive data that sales were increasing, sale prices were stable, average cost/sf was stable, etc.  (I've now had this discussion about 4 different appraisal reports with 3 different lenders.)  There I was, stuck in my old ways of picking the most similar comps and providing statistical analysis to show why they should be given most consideration. 

Fortunately, I am now enlightened to the new ways, and am looking forward to just searching an ever-expanding search area without regard to similarity until I can capture 3 or 4 sales that occurred within the past 3 months.  It will be so much easier, I now look forward to each new day with such enthusiasm I can hardly stay in bed!  No more dreary old research and analysis for me!  Join the wave!!!!


PS - For those of you unable to recognize rampant sarcasm when you read it, I am just kidding.  There is no new method, no new paradigm, just me venting a little after failing to find any sign of common sense in the underwriting departments of several lenders.  Sorry to have gotten your hopes up... 

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Posted by Mike Lay (Austin Area) on January 20th, 2009 10:06 PMPost a Comment

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I have run into the same problem a few times lately. I have no idea when the underwriters job was changed from assisting the lender in making a lending decision to tell the appraiser how to perform an appraisal. I've had clients contact me wanting to know why I didn't use certain comps and actually wanting me to explain why I didn't use them! EXCUSE me, but once you start providing me comps that is influencing my work and overstepping your job as an underwriter. Order a desk review or a field review. The worst part of the whole thing is the HVCC is going to make things even worse. I am already planning another line of work and will do appraisals part time. It saddens me as I have been doing appraisal work since Jan. 2002, but I don't see things getting any better. The big banks and lenders have always pretty much dictated how the appraisal "profession" is run and know they will have stranglehold on it. What really upsets me is no one will or can do anything about it. I can't think of any other industry that honesty and integrity are normally looked at as bad and will cost you work. I can also not think of another industry, that can let the A.G. of a state like Cuomo come in and dictate federal policy. I mean could you imagine if a plumber or car mechanic were all of a sudden told, you can not work for your clients any longer or have direct contact with them. A third party company will contact you with work and they will also take 30% to 50% of your fee AND you can not be paid at that time, they will pay you at their leisure. Guess what, car mechanics and plumbers would either all leave the field or tell people F-You! Once the HVCC is implemented there will be no appraisers, just form fillers following the orders of higher ups. As I tell people, you think the housing market looks rough now, wait another 4 or 5 years down the road, because it will make what's going on now look like a mild bump in the road. And the cray request from UW's will get worse and more frequent, so get used to trying to pound square pegs into round holes. I for one know that I'm not going to sit around and take it any longer. The saddest thing of it all is that lenders, bankers, mortgage loan officers, even Realtors all make thousands of dollars of each transaction and the big Banks and lenders and the AMC's that THEY OWN are not content, they have to take out of the appraisers fee, the smallest out of everyone involved in the transaction. Could you imagine if they tried an HVCC type of agreement with a home inspector or survey company? Sorry for the long post, I've just had enough of appraisers not standing up for themselves Jacob Valverde

Posted by jacob valverde on February 28th, 2009 3:11 PM


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