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Meatloaf

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Reply with quote  #1 
I know that the number at the bottom of page 2 reflects "Market Value".

I know that "Market Value" must be associated with a market derived exposure time.

I have a client wanting me to change my market derived exposure time (which currently reads 30-200 days) to 90-120 days on the uspap addendum.

If I limit my exposure time to a client restricted period (not even sure I can do that) does my resulting value meet the defined "Market Value" pre-printed on the form?

FOR ALL CHASE DEFAULT ASSIGNMENTS: Opinion of Value at the bottom of page 2 must reflect a client imposed exposure time of 90-120 days

What say yall?

My thoughts is that this would be a violation of USPAP as it creates a misleading report.  The client says it is OK because Chase wouldn't be able to get away with it if it weren't OK.  I told them that CHASE gets away with a lot of crap that isn't OK and it is the AMC's job to run interference and to make sure that what they are requesting is not a violation of USPAP.



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MEP

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Reply with quote  #2 
If your market is up to 200 days, would a shorter exposue period change the offering and or sale price. I use 30 to 90 days on most of my stuff but 15 to 45 days may be more accurate.
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Meatloaf

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Reply with quote  #3 
Quote:
Originally Posted by MEP
If your market is up to 200 days, would a shorter exposue period change the offering and or sale price. I use 30 to 90 days on most of my stuff but 15 to 45 days may be more accurate.


Doesn't matter.

Are we not required by USPAP to DEVELOP an OPINION of REASONABLE exposure time and base the opinion of market value on that?  If the exposure time is dictated to us, is the resulting value "market value" since it wasn't developed by the appraiser as a "reasonable" exposure time?

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Tea

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Reply with quote  #4 
Sounds like they think you're cheating by estimating a very wide exposure time.  


Look up Disposition Value in the Dictionary of Real Estate Appraisal.

A lot of web site dictionaries call it the same as "Liquidation Value", but it's not.
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Tea

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Reply with quote  #5 
Quote:
Originally Posted by MEP
...15 to 45 days may be more accurate.


I'm seeing the same thing...
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johnmbryant

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Reply with quote  #6 
Use the DOM on your 1004mc.  Mine are generally less than 90 days.  I put "Less than 90 days" as the exposure time.  This is a hot market in my area.  Nothing decent lasts a month.  Your market may be different.  Nevertheless, exposure time for each property is the days on market.
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Meatloaf

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Quote:
Originally Posted by johnmbryant
Use the DOM on your 1004mc.  Mine are generally less than 90 days.  I put "Less than 90 days" as the exposure time.  This is a hot market in my area.  Nothing decent lasts a month.  Your market may be different.  Nevertheless, exposure time for each property is the days on market.


Ok.

So if I say the exposure time is 92 days.  That 92 days is the median of a range between 2 and 242 days.  Wouldn't the median be a tad misleading when half of the sales took longer than 92 days to sell?

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treskirkland

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Reply with quote  #8 
But how many of those that took longer to sell were over priced?   Isn't the estimated exposure time the time need for exposure for the appraised value?    It's not unusual for REO properties to want a "quick sale" value.  Right now in most markets it would be the same as houses that are priced accurately generally go u/c in less than 30 days.  If your median DOM is over 90 days then it is probably being distorted by a few sales that took a long time to sell either because they were over priced or something was wrong with them.
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Meatloaf

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Reply with quote  #9 
Wouldn't "over-priced" need to be included in the analysis too?

If we only look at houses that are not "over priced" won't we limit our analysis to only those sales that sold quickly?

I mean, if we are going to arbitrarily assume that properties that took longer to sell must have been over-priced then ignore those properties we are missing a large part of the market.

Maybe they weren't over-priced... Maybe the seller was an asshat, maybe the neighbor had a defunct van parked in his yard that you could barely see through the bahia, maybe the agent listed it in the incorrect section of town, maybe.... Maybe it was over-priced... Maybe the house just wasn't clean and the yard unkept.  Maybe the seller countered a less than full price offer than the buyer walked.

We can't know all this in a bulk analysis, so if we are to assume that every house taking longer than an arbitrary time must have been over-priced or poorly marketed then we are setting ourselves up to under estimate the exposure time.

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Bobby

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Reply with quote  #10 
You are causing a glitch in the matrix when you go outside the check boxes.


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treskirkland

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Reply with quote  #11 
Quote:
Originally Posted by Meatloaf
Wouldn't "over-priced" need to be included in the analysis too?

If we only look at houses that are not "over priced" won't we limit our analysis to only those sales that sold quickly?

I mean, if we are going to arbitrarily assume that properties that took longer to sell must have been over-priced then ignore those properties we are missing a large part of the market.

Maybe they weren't over-priced... Maybe the seller was an asshat, maybe the neighbor had a defunct van parked in his yard that you could barely see through the bahia, maybe the agent listed it in the incorrect section of town, maybe.... Maybe it was over-priced... Maybe the house just wasn't clean and the yard unkept.  Maybe the seller countered a less than full price offer than the buyer walked.

We can't know all this in a bulk analysis, so if we are to assume that every house taking longer than an arbitrary time must have been over-priced or poorly marketed then we are setting ourselves up to under estimate the exposure time.


But your estimated exposure time for the appraisal assumes that none of those conditions exist, unless otherwise noted.  If I appraise the subject at $200,000 with 30 day exposure time, but the seller decides to list it at $250,000 well then the 30 day exposure time wouldn't apply.   If you are saying the value is X within an extended marketing time, the lender is wanting to know at what price would it take to sell the property in their requested number of days.  
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Meatloaf

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Reply with quote  #12 
Quote:
Originally Posted by treskirkland


But your estimated exposure time for the appraisal assumes that none of those conditions exist, unless otherwise noted.  If I appraise the subject at $200,000 with 30 day exposure time, but the seller decides to list it at $250,000 well then the 30 day exposure time wouldn't apply.   If you are saying the value is X within an extended marketing time, the lender is wanting to know at what price would it take to sell the property in their requested number of days.  


The problem is with the assumption that the house would ever sell at $250K with extended exposure time.

The market value is the market value and it doesn't matter how long you plan to market it for, the market value will never be more than what it is worth.

For example.... If you say that typical exposure time is 90-120 days, marketing a house for a year won't get you a nickle more money than you would should have gotten within that estimated 90-120 days.

Often times when you see price reductions and extended market times, it is not always due to "over pricing".  Sometimes that first deal or two falls through for some reason, sometimes the seller thinks his house is worth 100% of asking price and declines that good offer that was 98% of the asking price.

To make the assumption that sales with extended marketing times must be due to a price that is too high is simply misleading the client into thinking a higher percentage of homes sell within a shorter period.

BTW... Why do we report "market value" which is a hypothetical sale price combined with a reasonable exposure time, yet we do not report (no USPAP requirement) the reasonable sale/list ratio or a reasonable listing price?

I know its on the 1004MC, but why does USPAP not require the three items.... Market Value, Reasonable Exposure Time and reasonable asking price?  What good does it do to disclose exposure time if not in conjunction with a reasonable list price?

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BillDing

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Reply with quote  #13 

30-200 days???   Way too broad, imo.  

I agree with you though....client can go screw themselves if they think they can dictate us on our opinion of what the market is doing.


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Meatloaf

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Reply with quote  #14 
Can you expand your thoughts on why you think the range is way too wide?

I am hearing that from a lot of people on the other forum, but none have offered an explanation.

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RubberStamp

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Reply with quote  #15 
You have successfully pointed out that estimated exposure time is a bunch of doo hicky..    that is, unless you are drilling down from 90 days in an average or slow market for fire sale value...  such as with an REO.   Higher exposure time does not result in a higher price and could actually produce the opposite.

That still isn't going to make this go away..  Apparently USPAP does allow the client to define market value for us and to us in some ways... like the AMC said... otherwise the lender would get serious push back from FNMA and friends... which they are not.

The best thing you can do is disclose the lender imposed guideline and state that it may or may not be valid but it was a necessary requirement.
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BillDing

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Reply with quote  #16 

For the homes on the top end, they didn't jump on the market at a competitive price and/or with good marketing skills.  They may have put their home on the market at $825 when they should have put it at $725k.  Then they slowly lower their price, but now the market is seeing the marketing time and saying "why didn't that sell? Something must be wrong with it"  You wouldn't take that house @200 days...you'd take it at the correct price reduction and then compensate for the market aversion to it being on the market so long.   Unless you're in an area where home sales are rare, the market time is going to be fairly tight.  You need to ask yourself what is the most probable marketing time span for a home that is competitively priced and marketed well.  (what it would sell for with a good realtor)

 

I personally think marketing time is more like 15-90 days in this current hot market...Chase can pound sand if they don't like it.  It's not their report


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Meatloaf

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Reply with quote  #17 
Can you expand your thoughts on why you think my range is too wide?  
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BillDing

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Reply with quote  #18 
Can you expand your thoughts on why you think my expanded thoughts are too narrow? 
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Meatloaf

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Reply with quote  #19 
I didn't say yours were too narrow.  You said mine was too big (I hear that a lot BTW).

Can you please explain yourself?

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