Okay, this has got to be one of my biggest pet peeves in appraising. I spend time on my reports, I don't churn and burn appraisals. I do my research, look at the sale statistics, find the best comps and put meaningful data into my reports.
In the neighborhood section of the report there are some checkboxes for housing trends: Property Values, Demand/Supply, and Marketing Time. All three lines have three checkboxes each to indicate the trends. If I check the box that indicates property values are declining I back up that decision with statistics in one of the paragraphs below. For instance, last October the average per square foot price in the neighborhood was $188, and it is now $138. Declining values, right? Without a doubt, I will get a call or an email from the lender, the underwriter wants you to check the box indicating stable values. Huh? Does the underwriter have their head in the sand. Declining values are all over the news!
I get the same thing with Demand/Supply. I'll check oversupply and put in the paragraph below that the neighborhood has only average X number of sales a month and with XX number of listings on the market there is 14 months of supply. How is that not an oversupply?
On the other hand, I've checked stable in a neighborhood and have been asked to change it to declining. Okay, but that's not what the data indicates.
Anyone else experiencing the same thing? How are you handling it?
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An issue was addressed last week in AppraisalToday pertaining to altering reports and appraisers being requested to change the boxes checked indicating an increasing, stable, or declining market. The responding conclusion is as follows:
If the appraiser is aware that a market is declining and
intentionally reports it otherwise, he or she is in violation of the
ETHICS RULE. If an appraisal report indicates that property values are
"stable" when they are actually declining and the appraiser's data
supports the conclusion of declining values, the report is misleading and
in violation of Standards Rule 2-1(a). In addition, if the appraiser does
not properly recognize that a market is declining, he or she may also be
in violation of other requirements in STANDARD 1, as well as the
COMPETENCY RULE.
Do the proper and through research, document your files, check the applicable boxes in the report for the correct data conclusion, and stick by it, regardless of what the lender, underwriter, or anyone else WANTS you to indicate.