All Forum Posts by: Jay Levy

Yea...I appreciate that you appreciate what I wrote, but you're not listening to it - lol.

The types of things you are thinking about and talking about are quite valid and you are not alone, but the reason I say that is not why you think it is. Because that appraisal report is designed by the lender, for the lender, and not intended for you whatsoever, despite the fact you paid for it and have a copy of it in your possession, you really don't know what you're looking at or how to really interpret what it says. I am not at all trying to be insulting or condescending, what I'm saying is it's not your report, it wasn't written for you, and therefore you struggle to understand it.

In retrospect, the two posts I made in this thread are also very likely confusing and misunderstood by most people. Chris, who is a lender, and a smart one at that, gets what I wrote. He reads mortgage appraisals all day long, every day, and has intimate knowledge of the lending industry and mortgage appraisals. Mortgage appraisal reports are written for people like him, and so very often certain things go unsaid because it is expected the intended user of the report (the lender, not the borrower) understands many things without needing explanation. Such as how adjustments in the sales grid really have zero meaning or relevance in the grand scheme of things.

The appraisal industry needs a lot of help. There is too much confusion and ignorance among the general public when it comes to what appraisals are and much more importantly, what they are not. I tried very hard to influence my industry through my peers and regulatory institutions, but the truth is the whole thing is too disorganized and fragmented and political and greedy - I gave up and walked away.

I don't know what else to say. Sorry I went on and on and was little help.

I'll leave you with this. Stop looking at the details - I mean it, knock it off. The best way to judge if you got a fair appraisal is to do two simple things. First look at the 3 comparable properties that were presented in the sales comparison grid (and the rental grid too I suppose, for a judgement of market rents). Ask yourself a simple question, if you could not buy the property you own, are the 3 properties reflective of a comparable substitute, GENERALLY SPEAKING (I'm all caps because you seem like the sort of person that likes to get bogged down on small details). If the answer is yes, then good. If the answer is no, stop right there, that appraisal is not supported with relevant data. If the answer is yes, then look at the actual sale prices, NOT the adjusted sale prices at the bottom of the grid, the actual sale prices are reported at the top of the grid. The opinion of value the appraiser made ought to be no more than the highest and no less than the lowest of the three values of the three sales. If that is not the case, the appraiser has written pages of BS to explain why, and there is a 99.99% chance they can't prove any of it. Those actual sale prices, NOT the adjusted sale prices, are the ONLY factual market data in the entire report - everything else is not much better than an educated guess and so therefore, that factual data is the only thing that counts. No, it doesn't really help fine-tune the value down to a single price does it??? LOL. Sigh. I gotta leave this one alone. I also gotta stop jumping in a thread every time someone gets annoyed with an appraisal - lol.

Good luck.

 I was a mortgage appraiser for 14 years. Some interesting comments made so far, most are...

The first thing you need to realize is the bank orders the appraisal and it is their appraisal for their own purpose, not yours. I bring this up because you don't understand what your looking at and what it all means and how it all works. Few people do, including the damn lenders (underwriters and loan officers) all too often.

The first question I ask is if the appraisal report was done on a FNMA form. If so, no matter what your lender is telling you otherwise, the appraisal is going to be done to FNMA standards, unless the appraiser is an idiot (and that happens all too often too).

And just because there are somewhere around 10 different ways to approach value on the 1025 Small Income Report, the appraiser only uses one, because FNMA only recognizes and loans according to one - the reconciliation of the sales comparison approach. And there is only one piece of credible data within the sales comparison approach, the actual sale prices of the comparable properties.

The problem your appraiser has, and now you have, is a lack of data. Frankly, that makes the appraisal report questionable right there, and if you wanted to challenge it or try to have the lender hire another appraiser, that would be the path I would suggest. I forget off-hand which one it is, but in the fine print of the appraisal report there is a certification that states the appraiser had adequate data to develop a credible opinion of value - clearly they don't and should have withdrawn from the assignment.

They don't have enough comps. Even if they were going to place weight on the price per bedroom approach, they have no basis for that approach, or the adjustments they have made - or at the very least (and nicest I can be about this) you are not seeing that data in the report - they might have that somewhere else in their work file or another work file.

At the end of the day and as stated earlier the relevant data used in small income mortgage appraisals is the actual sale price of the comparable properties. This is THE ONLY data that is not subjective and can be used as a credible basis for anything. But, just because I said that and it is in fact true, does not mean the appraiser did it that way or the bank understands that either!!! Mortgage appraisals are a ****-show and that's one of the big reasons I walked away. All of that needs to be taken up with FNMA, the true dictator of appraisals and the appraisal industry. And you thought appraisers were an independent third party didn't you!!! Not with mortgage appraisals. USPAP aint helping either - but that can be traced back to FNMA too.

Sorry all I have is more of a rant and not more helpful stuff. Lender rules/general practices are stopping the appraiser from going back in time or out of market to find and use data for analysis and report support. However, that is exactly what needs to be done. And in any event, because multi-family data is found in less quantity and quality than would be ideal (far from it in your case) an appraisal of such properties will always be weak.

Here is my advice for the future - ignore almost everything in the appraisal with exception to two things. First consider if the properties used as comps are comps and second the actual sale price of those comps - the final opinion of value ought to be supported with those two things. The sales grid with adjustments is nonsense and lacks any credible support - no matter what garbage the appraiser has said about any of it in their report.

I'm too honest and too good at math to be a mortgage appraiser. Need to lack one or the other or both to succeed in that industry.

Good luck.