CAREA General Meeting 05/16/2012

AMC Bill has passed!!!!  Thanks in no small part to the tireless efforts of Gayle Berry.  Had CCA not brought in a lobbyist to monitor the bills on the floor, our bill never would have made it this far.

Appraiser Panel:

Jo Stinett, Terry Pixley, Rita Carson, Mike Carton, Doug Spears

The purpose of the panel is to allow appraisers to see what methodology is being used by our peers.  We are supposed to keep in line with our peers, but so many times we don’t even know what our peers are doing.  Jo has identified some issues that appraisers fall short on when defending themselves should a complaint ever be filed.  One main shortfall is the analysis of the data.  Another is how are we justifying our adjustments.  What methodology are we using to determine the markets response.

• 1. Defining a neighborhood: homogeneous properties, similar appeal, major streets if applicable, try to keep all his comps within N, S, E and W. Another approach, if I were a buyer, where would I be inclined to look for similar properties? Try not to cross major boundaries. Generally try to stay within the lenders guidelines. Sometimes school districts can be used, but all properties are different. Reviewers are trained to use major landmarks or boundaries, so when you cross one or disregard one it should be explained.
• 2. Determining market conditions: Defining the neighborhood should be the first step. 1004MC should show data within your neighborhood boundaries. Some pull market data prior to pulling comps and inspecting the property. Is the top of page 2 the same as your 1004MC? Yes, seems the lenders want the two to match. If there is a valid reason that they differ, it should be explained thoroughly.
• 3. Seller Concessions: How do you determine if the concessions are normal consideration and if they should be adjusted for on the sales comparison grid. One thought is that $5,000 seems to be typical in his market area for concessions. If it’s over $5,000 there will be an adjustment. Anything below that is considered to be typical. Another thought is to adjust any concession above three percent. Another thought is that if you can’t find it or prove it, you should deduct dollar-for-dollar. Final thought, any concessions that are not included in virtually every transaction in the market area should be adjusted for. If most sales see concessions, they are seen as normal consideration. If they are considered to be a cost to sell, how can that be adjusted. In some areas the seller has to participate in buyers assistance they will not be able to sell their home.
• 4. Site Size: Should site size be adjusted for? You have to evaluate not just the size but how much is usable, grade, use, etc. In some areas a large lot may be a downfall due to cost of maintenance. If you can’t justify the site size adjustment it should not be adjusted for. Always try to bracket the lot sizes and that will help to determine if an adjustment is appropriate. If you are doing a dollar per square foot adjustment for site size, you should advise how that has been derived as it doesn’t seem to make any sense. Come to find out there are many peers adjusting at a dollar per square foot. If we are doing what our peers are doing, evidently it’s okay to adjust in this manner. However, we are charged with making market derived adjustments.
• 5. Quality of construction and condition adjustments: It’s okay to adjust one Q3 versus another Q3 for something such as stucco versus frame as long as there is an explanation. Try to find homes of similar quality of construction and you won’t have to worry about making the adjustment. The UAD definitions are fairly clear and can be used to define conditions and rate the quality of homes.
• 6. Bath, Bedroom and GLA: No adjustment for bedroom count as it is usually covered by the difference in GLA. Baths are adjusted based on paired sales. GLA is adjusted at 1% of the selling price. All these things are jumping off points and will be evaluated and tweaked as the properties are compared. Sometimes it is okay to use your experience because you cant get it any other way.

It is only through discussions with our peers that we can know what our peers are doing.

Download selling guidelines from www.efanniemae.com  These guidelines will help you with your scope of work.