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Rampart
1284 Posts |
 Posted - 11/04/2009 : 5:00:18 PM
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| Can a private arms-length sale be used as a sales comp even though it was not listed in MLS? Sale was dated 7/19/2009. The sale is recorded in public records and is listed on the county property appraiser's web site. |
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KHufford
10407 Posts |
Posted - 11/04/2009 : 5:05:12 PM
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Yes, it can be used but the appraiser would likely need to address any special considerations involved.
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Adept Appraisal
1623 Posts |
Posted - 11/04/2009 : 5:09:56 PM
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Absolutely it can, and in some cases it's a must. There are areas of (relatively) so few sales these days that if you have even a private sale it makes your day.
As Kyle said, all things should be well explained. Describe, disclose and disclaim. These private sales are not U/W favs. |
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Rampart
1284 Posts |
Posted - 11/04/2009 : 5:22:03 PM
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| Thank you for your replies. I asked a few local appraisers who said the same things. The appraiser who did the report said that the private sale could not be used because it wasn't in MLS, and without pictures of the interior and features of the home that are listed in an MLS report, the private sale would not be reliable. The county appraiser's office documents the date of sale as well as the sf, # bdr/bth, lot size, etc. |
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Adept Appraisal
1623 Posts |
Posted - 11/04/2009 : 5:23:58 PM
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| Hell, man, that is what the 'Extraordinary Assumption' is for. That was a boneheaded move on the appraiser's part, IMHO... |
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Rampart
1284 Posts |
Posted - 11/04/2009 : 5:36:06 PM
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What's even worse is that the appraiser stated he couldn't use that comp because it is in a gated community that he doesn't have access to, although one of the comps he used is a few houses down from the private sale- in the same gated community. What is Extraordinary Assumption?
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Hopland
4126 Posts |
Posted - 11/04/2009 : 6:08:50 PM
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EXTRAORDINARY ASSUMPTION: an assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.
It probably would not be appropriate or necessary to use an extraordinary assumption in this case.
The appraiser is right in some of the things he or she is saying. It can be very difficult to vette a private sale. But I'd still consider it. The decision to place it in the presentation of sales in a sales grid is a decision the appraiser needs to make. |
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Adept Appraisal
1623 Posts |
Posted - 11/04/2009 : 6:19:34 PM
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BS. You better state what you don't know. Which in a private sale is a boatload. Start with condition. A total assumption. Please.
As for the pic, that's bad, gotta get that. |
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Sarge
201 Posts |
Posted - 11/04/2009 : 9:09:16 PM
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| Will the current and past owner confirm facts about the sale and whether it was or was not an arms length transaction.. If not, then the appraiser is probably wasting their time on that particular comp. On a private sale it might be danged near impossible to prove it is an arms length. The two parties involved may not want you to know the details of the transaction. |
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KHufford
10407 Posts |
Posted - 11/04/2009 : 9:13:39 PM
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That appraiser is simply a lazy f#ck. He should have used all means necessary to get the needed info and photos of exterior.
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Annemieke Roell
1097 Posts |
Posted - 11/05/2009 : 03:45:37 AM
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quote:
Originally posted by KHufford
That appraiser is simply a lazy f#ck. He should have used all means necessary to get the needed info and photos of exterior.
The appraiser should have made reasonable efforts to obtain the information, but if I had sufficient sales to finish the report properly with data I could verify, I would probably stay away from those sales I could not properly verify.
My one question is ..... as this sale is in a gated community .... is the Subject in one as well? |
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Hopland
4126 Posts |
Posted - 11/05/2009 : 07:20:41 AM
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Kyle... Sometime you should try to look up a sale or two in a public record source and then try to call the new property owners and start asking questions about the terms of the sale and the condition of the property. If all goes well they'll just hang up on you. Other scenarios are calling the cops, cursing you, telling you to mind your own "f'ing" business, or just lying to you.
Dave... An extraordinary assumption is not well received by Fannie Mae or the secondary market without validation. That's why there is now a "checkbox 4" on Page 2 of the revised FannieFooForm. Appraisers abused EA's in times past and the secondary market caught on to this.
The appraiser can just state that there are some holes in the data concerning the FSBO sale used. If there are too many holes and the appraiser still thinks the sale should be in the sales grid they should just consider it additional market data but didn't rely on it too heavily in the reconciliation of the sales comparison approach. If, on the other hand, they think this sale is crucial to the opinion of value they should do whatever it takes to confirm the information from a disinterested source. |
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Hopland
4126 Posts |
Posted - 11/05/2009 : 07:30:22 AM
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| Rampart... I suspect you are upset with the appraiser because that sale could have resulted in a possibly higher value opinion needed for loan purposes. |
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Rampart
1284 Posts |
Posted - 11/05/2009 : 1:42:44 PM
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quote:
Originally posted by Hopland
Rampart... I suspect you are upset with the appraiser because that sale could have resulted in a possibly higher value opinion needed for loan purposes.
You are incorrect in that assumption. Just asking appraisers for their professional opinions. Would you use a short sale comp, because the info was readily available via MLS as a comp, even though it doesn't reflect similar sales within the same community? Or, would you look beyond using only MLS as your source for sales? |
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Hopland
4126 Posts |
Posted - 11/05/2009 : 1:57:54 PM
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| Why would you care what comps the appraiser used unless it was screwing up your loan? |
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Annemieke Roell
1097 Posts |
Posted - 11/05/2009 : 3:22:14 PM
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quote:
Originally posted by Rampart
quote:
Originally posted by Hopland
Rampart... I suspect you are upset with the appraiser because that sale could have resulted in a possibly higher value opinion needed for loan purposes.
You are incorrect in that assumption. Just asking appraisers for their professional opinions. Would you use a short sale comp, because the info was readily available via MLS as a comp, even though it doesn't reflect similar sales within the same community? Or, would you look beyond using only MLS as your source for sales?
Any sale that does nor reflect similar sales or the Subject it is a sale, not a comp. |
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rescomstl@yahoo.
88 Posts |
Posted - 11/05/2009 : 3:23:41 PM
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quote:
Originally posted by Rampart
quote:
Originally posted by Hopland
Rampart... I suspect you are upset with the appraiser because that sale could have resulted in a possibly higher value opinion needed for loan purposes.
You are incorrect in that assumption. Just asking appraisers for their professional opinions. Would you use a short sale comp, because the info was readily available via MLS as a comp, even though it doesn't reflect similar sales within the same community? Or, would you look beyond using only MLS as your source for sales?
This might come as a surprise to you, but a short sale does not mean that it sold short of market value. In fact, a lender will only accept a short sale if the comps in the area support the short sale price. In other words, a short sale should sell for market value. |
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Bob CRA
183 Posts |
Posted - 11/05/2009 : 4:23:26 PM
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quote:
Originally posted by Hopland
Why would you care what comps the appraiser used unless it was screwing up your loan?
Good point... |
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Rampart
1284 Posts |
Posted - 11/05/2009 : 4:32:10 PM
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quote:
Originally posted by Hopland
Why would you care what comps the appraiser used unless it was screwing up your loan?
I appreciate your questioning my motives for my questions. Rest assured that my loan deal is fine. You didn't however answer the question I posed to you earlier. |
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Rampart
1284 Posts |
Posted - 11/05/2009 : 4:45:25 PM
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quote:
Originally posted by rescomstl@yahoo.com
quote:
Originally posted by Rampart
quote:
Originally posted by Hopland
Rampart... I suspect you are upset with the appraiser because that sale could have resulted in a possibly higher value opinion needed for loan purposes.
You are incorrect in that assumption. Just asking appraisers for their professional opinions. Would you use a short sale comp, because the info was readily available via MLS as a comp, even though it doesn't reflect similar sales within the same community? Or, would you look beyond using only MLS as your source for sales?
This might come as a surprise to you, but a short sale does not mean that it sold short of market value. In fact, a lender will only accept a short sale if the comps in the area support the short sale price. In other words, a short sale should sell for market value.
It doesn't come as a surprise at all. I happen to agree that in some pockets where short sales and foreclosures are the norm that market values are affected, as they should be. I still haven't had anyone answer my question yet. |
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Hopland
4126 Posts |
Posted - 11/06/2009 : 05:36:50 AM
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You still haven't answered my question and it is a relevant one. You asked about this property on the appraisers forum and are essentially getting the same answers but they don't seem to be the answers you want.
MLS sales are better because there is more verifiable information. Private sales are hard to vette which was my answer to you as *Posted - 11/04/2009 : 6:08 PM*
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Rampart
1284 Posts |
Posted - 11/06/2009 : 06:32:24 AM
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quote:
Originally posted by Hopland
You still haven't answered my question and it is a relevant one. You asked about this property on the appraisers forum and are essentially getting the same answers but they don't seem to be the answers you want.
MLS sales are better because there is more verifiable information. Private sales are hard to vette which was my answer to you as *Posted - 11/04/2009 : 6:08 PM*
Your question was answered, the deal is fine at the present value. The borrower questioned the use of the short sale in his appraisal and the absence of the private sale which happen to be a few houses away from each other, on the same street. He had previously considered either the short sale, or the FSBO a few months ago. He decided to build a new home instead. I think his question is legitimate, which is why I posed the question on both sites. |
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rescomstl@yahoo.
88 Posts |
Posted - 11/06/2009 : 2:45:46 PM
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quote:
Originally posted by Rampart
quote:
Originally posted by Hopland
You still haven't answered my question and it is a relevant one. You asked about this property on the appraisers forum and are essentially getting the same answers but they don't seem to be the answers you want.
MLS sales are better because there is more verifiable information. Private sales are hard to vette which was my answer to you as *Posted - 11/04/2009 : 6:08 PM*
Your question was answered, the deal is fine at the present value. The borrower questioned the use of the short sale in his appraisal and the absence of the private sale which happen to be a few houses away from each other, on the same street. He had previously considered either the short sale, or the FSBO a few months ago. He decided to build a new home instead. I think his question is legitimate, which is why I posed the question on both sites.
I assume that the short sale was one of the lower sales and the private sale was one of the higher ones. There are always going to be a range of sales in the area. One high sale sold privately that does not have any other support for what it sold for is obviously not a good comparable. Typically short sales are exposed to the open market, in the MLS, and are supported by comparable sales in the area (assuming it is in decent shape). This is probably the case with this appraisal. |
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