How are appraisers handling time adjustments, if at all?

By
Real Estate Appraiser with LIRA Corp

As an appraiser on Long Island, market values have come down over the past year or so.  I was wondering how other appraisers analyze time adjustments for appraisal reports?   And how do brokers view this? 

When I am looking at the current closed comparable sales (I stay within six months when possible - or obviously newer is better!)....compared to current comparable listings- I see that using the sales comparison approach only would produce higher values in the area.  If for example, three houses sold that are similar to mine from $350-400K...But there are five or six listings at $300-350K....I have to use time adjustments.

Lenders are not happy about it and want detailed explanations....and I was wondering how other appraisers out there felt - and what you use. 

 

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Rainmaker
101,684
Kenneth Rossman
FL Certified General Real Estate Appraiser #RZ3504
Appraiser, Ken Rossman

David-

Might be a local custom issue.

In my market, Realtors/brokers generally draw up "binders" which are then given to attorneys to draw contracts. The vast majority of transactions have contracts reviewed by attorneys before they are signed.  Usually the SP$ stands unless problems are discovered by an engineer/inspector, appraiser or at final walk through...

August 24, 2008 07:06 PM
Rainer
6,630
Michelle Tucci
LIRA Corp

Thanks for the great responses...

Ken & Dave - when I appraise - I use the title date.  There are many areas on Long Island where other sources besides MLS are used, and they draw from public records.  Public records only uses the transfer of title date, so there isnt a contract date etc  - the title date may or may not be months from the contract date.  It all depends on the sale, the financing, etc.  But, since I do not rely exclusively on MLS data, I stay consistent and use a title date for all my reports. 

Again, this seems to be opinion - since there is no "right" or "wrong" way.  I put right in my report TD for Title Date - as to not mislead....

I have never analyzed contracts for my comparable sales.  I imagine it would not only hold up the report for weeks asking people to be accommodating and make those documents available to appraisers...but most would flat out refuse to do so.  Where do you all get this information from??

September 04, 2008 04:02 PM
Rainer
14,996
David Hintz
AZAppraiser
Accurate Appraisals & Consulting of AZ

Michelle

Since you are in the same geographical area as Kenneth, you should probably take his opinion as the norm or readily acceptable.  If you were in my geographical area then perhaps a slightly different approach could be used and/or acceptable.  However, as I stated before, consistency in your method and detailed comments for the reasoning (for what is acceptable in your geographical area) is most important.

 

September 04, 2008 04:58 PM
Rainmaker
67,211
Richard D. Ferris
Florida State Certified (FHA) Appraiser
AmcAppraisalsinc.com

I am using a quarter by quarter, month by month, then yearly averages to gauge market movements.  I include a chart such as this:

Decline Chart

This would show, that although the 3rd quarter had a gain, the general trend has been declining.  The average for 2007 in this subdivision was -1.29% while 2008 continues an average of -2.38%.  Despite an uptick in the 3rd quarter, pricing is still going down.

I will then sometimes use this annual average as a monthly average (which smooths out the odd months such as during the 3rd quarter).  So in this case, I would have an average monthly decline of -2.38% or a daily decline of (2.38%/30) of 0.000793.   Then, I'll apply this to the days between the contract date and the effective date of the appraisal for my % adjustment for market decline.

November 05, 2008 09:21 AM
Anonymous #13
Anonymous
AK

Great information we are Orlando Florida appraisers and are always reading the blogs to get more information on the time adjustment issue.

November 19, 2008 12:14 PM
Anonymous
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Rainer
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Michelle Tucci

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