are appraisal adjustments supposed to reflect market reaction
Relative comparison analysis is the study of. relationships indicated by market data. without recourse to quantification. Many. appraisers use this technique because it. reflects the imperfect nature of real estate. markets. 06/16/2014 5.  The appraisal was ordered by lender or lender agent rather than another party (buyer, property seller or real. estate agent) to the transaction.  The appraisal indicates whether the property is currently offered for sale or was offered for sale within the. 12 months prior to the effective date of the appraisal. Appraisal Review Reminders.  If mixed-use property, the property is located in a residential neighborhood, is primarily residential in nature, and is typical for the properties in the market; represents a legal, permissible use of the property under the. Adjustments are made to the comparable properties to show if they are superior or inferior to subject. The adjustments are calculated on the comparable properties, not the subject. If a comp sold for $180,000, then you will add or subtract adjustments to account for positive or negative features. According to the agency, it will no longer have specific limitations or guidelines associated with net or gross adjustments. “The appraiser’s adjustments must reflect the market’s reaction (that is, market based adjustments) to the difference in the properties [of chosen comparables],” according to Fannie Mae. Fannie Mae Makes Appraisal Changes on GLA adjustments and Age of Comparable Sales. Fannie Mae recently made some important changes to its policies on comparable sales and gross adjustment guidelines. Their newly launched Collateral Underwriter (CU) takes effect next week on January 26. The basic idea is to use a negative adjustment on the comparable property, if the comp has superior features and positive adjustments on the comparable property if the comp has inferior features to subject. A BPO looks much like an appraisal, and the adjustments work the same way. Qualitative analysis recognizes the inefficiencies. of real estate markets and the difficulty in. expressing adjustments with mathematical. precision. It is essential therefore, that the. appraiser explains the analytical process and. logic applied in reconciling the value indications. using qualitative analysis techniques such as: Calculating adjustments is a judgment call based on an individual market. There is no across the board figure for square footage, garages or lot size. It is up to the preparer to figure what the actual adjustment figures are. I will provide one tip. Use the following list of reminders as a tool when underwriting the appraisal report. appraisal requirements, refer to the Freddie Mac Seller/Servicer Guide (Guide) Chapter 5601. Independence Requirements. compliant as required by Guide Section 5601.14, Appraisal Data and Delivery.
Yes, The appraiser’s adjustments must reflect the market’s reaction to the difference in the properties.