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"Give Me Some More Comps, Please!"

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                The Appraisal Institute, quoting the National Association of REALTORS®, noted that agents are also upset over the ongoing requests from underwriters and lenders for “more comparables”.  The story can be read here: http://www.appraisalinstitute.org/ano/newsletter/DisplayNwsLtrArticle.aspx?volume=13&numbr=19/20&id=18892

Their frustration is shared by appraisers.  Most appraisers have read and understand the limiting conditions that are a part of the “boilerplate” in the Fannie Mae Appraisal forms limiting conditions section. #7 of those states that the appraiser has used comparables which are locationally, physically, and functionally the most similar to the subject property.”  

What sets the appraisers off is that the request to either provide more comparables, or to use a specific comparable or comparables, comes from an underwriter, who in most cases, has “discovered” the “comparable” by using an AVM (automated valuation model).  First of all, the appraiser, in most cases knows about this sale—and has rejected it—either because the sale was not arm’s length (and an arm’s length sale is appropriate for the assignment), or the property was dissimilar to the subject. 

                The pressure to use non-arm’s length sales, or not use them (opposite sides of the same coin) asks an appraiser to violate USPAP (Uniform Standards of Professional Appraisal Practice).  USPAP says: “Standards Rule 1-4 “In developing a real property appraisal, an appraiser must collect, verify, and analyze all information necessary to credible assignment results.

<!--[if !supportLists]-->(a)                                        <!--[endif]-->When a sales comparison approach is necessary for credible assignment results, an appraiser must analyze such comparable sales data as are available  (emphasis added) to indicate a value conclusion.” [USPAP, 2012-2013, lines 560-563]”

In other words, it is the appraiser who looks at all of the data, and decides which data is appropriate—not the lender, not the underwriter, not the buyer, not the seller, not the agents. At the end of the day, it is the appraiser who is signing the certification page and putting his or her license on the line.

                This is symptomatic of the climate of fear and trepidation that lenders appear to be working in post housing bubble and Dodd-Frank.  The attitude appears to be: “we cannot have too many comps”. Instead, it should be: “let’s have the best comps”.  And, make no mistake about it, pressuring appraisers to use a particular comparable over one the appraiser has already selected, is pressure—the kind appraisers are not supposed to be subjected to any more. 

Alan Kirkpatrick
Austin Texas Homes - Round Rock, TX
Alan in Austin


Nice post and good information. Hope you have a great week. 

Oct 18, 2012 03:45 AM
Gwen Fowler SC Lakes & Mountains 864-710-4518
Gwen Fowler Real Estate, Inc - Walhalla, SC
Gwen Fowler Real Estate, Inc.

I think if appraisers write an explination on the comps they use, thus doing more up front work, they have fewer request for this type of data.

Oct 18, 2012 03:50 AM
Kenneth M Rossman
Appraiser, Ken Rossman - Boynton Beach, FL
FL Certified General Real Estate Appraiser #RZ3504

Excellent Post! This is one of many reasons that I want nothing to do with lender or amc related appraisals. Private clients, attornies and accountants etc. don't play these bs games...

Oct 18, 2012 04:09 AM