Great news for appraisers!

Real Estate Appraiser with Appraisal House Texas

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  Nope, it looks like that old, outdated method of choosing the most comparable sales is going the way of the wooly mammoth.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.  All I had to do was stick in 2 more sales that sold in the past 3 months, regardless of size and age differences, and everything was fine and the file was through underwriting!

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.  Sorry to have gotten your hopes up... 

Comments (34)

Mike Lay
Appraisal House Texas - Austin, TX

Buckaroo-guy (or gal),

I agree with you completely, and that's why all of my reports state that I consider the most recent and proximate sales to be the best indicators of value unless otherwise noted.  You will see that I wrote above "after I had provided extensive data that sales were increasing, sale prices were stable, average cost/sf was stable, etc."  So when I've got essentially a duplicate property that sold 5 months ago, and plenty of evidence that there is no decline in the market since that sale, then THAT is my best comp, not that house right next door that sold last week, but is 1,000sf larger and 20 years newer.  MOST COMPARABLE is the driving factor.  It is ALWAYS our job to determine if there is an effect on the value due to time, but if you have done the research and can prove that there is none (or properly adjust for it), then I will take the most similar property every time.

Jan 22, 2009 06:37 AM
Sara Goodwin
Ashcroft & Associates - Portland, OR
Portland, Oregon Appraiser

Hi Joyce - Sorry if I was surly - the 'buckeroo' thing caught me off guard this morning (too many Texan relatives, I think) - I think it's fair to say that we are all lumped in as the bad guys (and gals) as far as the RE world (and let's face it, the world in general) is concerned and so the constant defending of work does get old when we do a good job and we're being questioned by folks less familiar with the terrain or appraisal biz.  Hehe... welcome...

Jan 22, 2009 02:51 PM
Michelle Tucci
LIRA Corp - East Islip, NY

In todays market...appraisals are increasingly harder to do for so many reasons!  First off is the conversation heard here - How is it that somehow appraisers are to blame for banks bad lending decisions.  Sure - there were a few bad apples along the way - but arent there in every profession?  How come the reform landed on appraisers??  Why is that we have to constantly defend our work?? 

I feel your pain Mike.  I feel like with every job...the lenders are getting more and more ridiculous.  Obviously if you have a recent sale that is the same house it would have been in the darn report!  Ugh.  

As for Joyce's comment...apparently she worked with some shody appraisers in her day....

Wait until May - this blog will be on fire!!!!

Jan 25, 2009 06:35 AM
Rita Bradley
Laguna Hills, CA
Valuation Consultant in Orange County California 949-916-3263

Can hardly wait!  :(

Jan 26, 2009 04:59 AM
Sine Nomine

Sometimes it's OK to use more than 3 comps.

Maybe you could use 3 comps that sold in the last 3 months and then maybe another 3 that actually represent market value.

I know it's twice the work, but sometimes you just have to put in some extra effort.

Jan 27, 2009 10:31 AM
Amber Woodruff

Mike, that was great!  Thanks for the good laugh!  : )

Jan 27, 2009 10:32 AM
Mooney pilot

I just tell them I am the certified appraiser under Federal and State Regulations and gave them a USPAP complainant appraisal report.  Have the underwriter write it down on lender stationary, sign it and fax it on over so I can forward it off to the proper authorities.  It sort of killed my desire to appraise for residential lenders any longer.  Funny thing, this never happens from commercial lenders.

Jan 27, 2009 10:38 AM



I personally like that if dataquick says median values of homes in a certain zip code have declined 50% over the last year that is the time adjustment you must use.

Who really cares about the size, condition, neighborhood, location or what paired sales shows you if dataquick says that zip code has declined thats what should be used in your report.

Oh yeah what up with all the fuss about median values what ever happened about the average values?????????????????


Jan 27, 2009 11:06 AM
Tim in Indy


Happy to hear it's not just me getting this stuff.  I was just thinking the underwriters were getting paid by the stips and conditions, or maybe they think we have magic dust to help find these non-existing 90 day comps in the middle of winter. It appears that most lenders (one mentioned above) have declared the entire state of Indiana in a declining market (yes, thera are still some stable areas).
Don't they think we would have used these great comps if they were available??? 
I've started charging an extra fee upfront for a few of these lenders

Wow! that felt good to get off the chest.

Jan 27, 2009 12:31 PM
cindy in colorado

I don't think it's the underwriters so much as it's the amc's trying to fit each and every appraisal into a "specific perfect". In doing so, they are taking away the "independent" aspect of the process and in doing so,undermines the whole process of appraisal valuation.... Not to mention, "amc's- the middle man" taking a good chunk  (ka ching) of the fee for the appraisal itself in doing so. (Respa has some MAJOR catching up to do). Quality work and experience seem to be on the low end, while quick and cheap are sought after. Look at the major amc's and see what the below appraisal fees are and what they are stating the appraisal fees to be to the borrowers... 

Jan 27, 2009 02:43 PM
CLB in Colorado

Unfortunately, I need to agree with this - it seems that good comparables are ignored in favor of recent ones - just work on one with the exact same scenario - of course through an AMC.  Our entire appraisal process is circumvented by the "perfect" ideology, yet we are blamed for the housing problems.  Seems a bit unfair!

Jan 28, 2009 03:41 AM
Azalea Appraisal

Yesterday I was told by a Bank underwriter to use 2 more sales, at least 1 from the subject PUD, even though I explained in my report that there were none available, and that I had used the most similar and the most recent sales.  They also asked that I make across the board adjustments for location which I HAD made, and explain things that I HAD explained.

So... the problem in my case is the underwriter didn't READ (or can't read) the appraisal report.  I usually resolve these READING issues by speaking directly with the underwriter and going through the report with them.  In this case the Bank processor says the underwriter is an independent contractor and will not speak with the appraiser.  The underwriters are NOT appraisers and usually do not have any appraiser training, and in some cases, evidently, do not have to READ.

Jan 28, 2009 07:22 AM
Azalea Appraisal


So they paid you for an appraisal, and then used the AVM?  Sounds like they could have saved some money, but you probably needed the work.  Well that will be a lick on them when the value is shakey!!!  The standard AVM has an acceptable margin of value error of 10-25%.

Jan 28, 2009 07:28 AM

If we can't meet their "preferred parameters" we don't know that until we DO the appraisal.  So maybe we should get paid upfront for our "research" and then tell them we can't do the appraisal cuz there are no sales that meet their criteria!!

Jan 28, 2009 07:30 AM
Mike Lay
Appraisal House Texas - Austin, TX

I'm thinking a new form is in order in place of Comps 4-6.  How about this?

fake 1004 form

Jan 28, 2009 07:43 AM
Tim in Indy

Outstanding Form! 
Probably require us to pay $100 for another 4 hrs of CE to be able to use it though.

Jan 28, 2009 12:49 PM
Andrew Monaghan
The Monaghan Group - Glendale, AZ
CRS, GRI, EPro Associate Broker

Isnt that how FHA appraisers ahve always worked...

Jan 30, 2009 12:36 PM
Michael Regan
Deerfield Beach Appraisers - Deerfield Beach, FL

So appraisers should no longer hold back the best comps until the lender calls asking for better comparables than the ones used in the appraisal reports?

Feb 04, 2009 02:33 PM
Mike Lay
Appraisal House Texas - Austin, TX

Michael Regan, that is LOL hilarious!!!!!  So I'm not the only busting my butt to find, analyze, and explain the best comps, only to get a request to "add two more from the immediate subdivision that are more similar in size/age/condition/quality that sold in the past month" than what I already have in there?  Wish I had thought of that to begin with, Mr. Underwriter!! 

Feb 04, 2009 02:41 PM
Lorie Clift

I can so relate to all 37 responses.  I think all people who handle real estate transactions (Realtors, Brokers, Lenders, Underwriters, etc) should be made to take a USPAP class - yearly and test them too.  Perhaps then, they would allow the Appraiser to do the job of appraising the property and selecting the best comparables, rather than coming up with absolute nonsense.  Personally, I will not provide additional information if it leads to a misleading report - I'm sure the same applies to all of you, hence you would not be involved in the writing.

I don't know about all of you, but I got out of the corporate world because I worked for idiots, how the heck did it spill over into the Independent Appraiser world?

I'd like to know who is actually coming up with the underwriting guidelines.  I'd like to see them post the appraisal guidelines on the inter-net for us all to read through - before we begin to work for them.  Let's face it, with the changes our industry is undergoing, many people will be leaving this field of work.  While AVMs might be a useful tool (ha) there is no substitution for an interior appraisal of either type property (residential, commercial).  Eventually, (statistic say) our numbers are purported to dwindle down to less than half of the current appraisers.  Wonder how long some of the lenders would stay in business if they couldn't have our help in the process, if WE decided to have forums of who didn't pay, who attempted to force value opinions, who ask for irrelevant/non-appraisal types of information .  You get the picture. 

While the battles rage on, if the day is slow, don't forget about your liability insurance, they can be a great help with giving good argumental information for these types of problems.  We pay a lot of money to the groups we belong to in yearly dues/fees, get them to help.

Best of luck to you all, keeping up the GREAT work we all do.


Mar 16, 2009 02:39 AM