Appraisers' Free Forum

So, if your scope included starting at the contract price our peers would criticize your method? So what, unless avoiding criticism is a benchmark of good appraising. The contract itself is some evidence of the market assuming the principles are paying attention. Frankly right now, price is a pretty good indicator if an REO sale is involved.

My bet, to the extent that buyers have anything to say about market prices, is that the prudent are concerned about what their monthly payments are going to be. Sellers on the other hand want as much as they can get. And they can be in control if wages are increasing or if the banks do funny stuff. So, to the extent buyers can make payments, price + terms is value.

Well, my scope would not include starting at the contract price. I would not agree to appraise that way, and SOW must be agreed upon by both the appraiser and the client. I'm not comfortable doing that. I would certainly *consider* the contract price, but only at reconciliation time. Certainly not at comp-selection time.

That is fine. I am not challenging your choice of priorities, but I got to thinking about my own prejudices against using price as a delimiter and I'm wondering if that is actually a supportable prejudice to appraising or a reaction from predetermined value prohibitions. I'm thinking now, particularly in a slow market where sales are widely divergent due to foreclosures and crazy financing complexities if looking at prices may be a really legitimate technique, assuming of course intellectual and ethical integrity on the part of the appraiser.

Jim Plante wrote:But using Steve's method, you'll miss pockets of similar houses selling for more because of a good school district that ends across the street.

You are misinterpreting what I said. By using my method you will get both... all the properties that have similar amenities to the subject and all the properties that sold in the same price range.

So the underlying assumption is that there is enough of a price spread in similar housing to suspect price as a beginning point? Steve said he goes on to apply an amenity search in addition to the price. He added that he often finds that price reveals the best comps. Or at least I think he said that.

Pretty close, Edd. The most important factor is that sometimes a price search will reveal comps that you might otherwise miss... they won't necessarily be the best, but they might be needed in some cases.

As I said before, this method deserves the bad rap it got because some appraisers used it exclusively. Additionally, it was the domain of comp checkers. I do not support those kinds of activities.

Steve Owen wrote:But, usually, it's cost plus profit equals value.

Doesn't work here. Maybe builders are charging too much "profit." Buying a new house here is like buying a new car. Value drops like a rock as soon as you sign. Where I am cost does not equal value in housing nor do repairs and renovations add their cost to value except maybe in REOs, in which case it is arguable that the availability of financing is the real trigger.

Sounds like fraud. Builder's jack up the price and roll it with trick financing. Then it would be cost plus profit less financing (external) depreciation equals value.

Steve Owen wrote:Sounds like fraud. Builder's jack up the price and roll it with trick financing. Then it would be cost plus profit less financing (external) depreciation equals value.

There are appraisers here who clamor to do the builder's appraisals. They constantly ask why the market prices are so low when compared to new construction. Duh! And they just keep reporting that new construction value is right in line with the contract.

I have taken several assignments on that will be ready for review this coming week. I need them back fast so I can meet the turn times I estimated.

And yes, a couple are mortgage related. But the clients were screened for quality and brokers aren't involved. I'm starving on principle.

Anybody?

I talked to Annie and she said she would review for me. Thanks Annie. Very much appreciated.

Edd Gillespie wrote:I talked to Annie and she said she would review for me. Thanks Annie. Very much appreciated.

Edd, and all others, I hope you that I, GP & Annie all would be more than happy to review other's work - we're professional. And I'm sure there are others on this forum that would do the same - we just make a file and save it for 5 years like always.

Otis wrote:

Edd Gillespie wrote:I talked to Annie and she said she would review for me. Thanks Annie. Very much appreciated.

Edd, and all others, I hope you that I, GP & Annie all would be more than happy to review other's work - we're professional. And I'm sure there are others on this forum that would do the same - we just make a file and save it for 5 years like always.

You can save it if you want, but I am asking for and accepting consulting in the form of review and I am the client.